Q2 2024 XP Inc Earnings Call

August 13, 2024

You have joined the meeting as an attendee and will be muted for the rest of the event. You have joined the meeting as an attendee and will be muted throughout the meeting.

Andre Parize: You have joined the meeting as an attendee and will be muted throughout the meeting. Good evening, everyone. I'm Andre Parize, a R&D engineer at Xpeed. It's a pleasure to be here with you today. On behalf of the company, I'd like to thank you all for your interest and welcome you to our 2024 second quarter earnings call. This quarter, the results will be presented by our CEO, Thiago Maffra, and our CFO, Victor Mansur, who will both be available for the Q&A session right after the presentation.

Unknown Attendee: You have joined the meeting as an attendee and will be muted throughout the meeting.

and I. I. I. I.

[inaudible]

Thank you very much for watching this video.

[inaudible]

E.R.

[inaudible]

Julio, Julio, Julio, Julio, Julio,

[inaudible]

and the other one is... ... ... ... ... ... ... ... ... ... ... ... ... ... [inaudible]

[inaudible]

Good evening, everyone. I'm Andre Prezy, RO at XP, Inc. It's a pleasure to be here with you today. On behalf of the company, I'd like to thank you all for the interest and welcome you to our 2024 second quarter earnings call.

Unknown Executive: This quarter, the results will be presented by our CEO, Chagum Afra, and our CFO, Vitor Monsour, who will both be available for the Q&A session right after the presentation. If you want to ask a question, you can raise your hand at the Zoom tool, and OEU will attend to you on a first-come, first-served basis. We also have the option of simultaneous translation to Portuguese.

Speaker Change: This quarter, the results will be presented by our CEO, Thiago Maffra, and our CFO, Victor Mansur, who will both be available for the Q&A session right after the presentation.

Andre Parize: If you want to ask a question, you can raise your hand in the Zoom tool, and we will answer you on a first-come, first-served basis. We also have the option of simultaneous translation into Portuguese. There is a button below if you want to turn on the translation.

Speaker Change: If you want to ask a question, you can raise your hand at the Zoom tool, and we will attend you on a first-come, first-served basis. We also have the option of simultaneous translation to Portuguese.

Unknown Executive: There is a button below if you want to turn on the translation, and before I begin our presentation, please refer to our legal disclaimers on page 2 on which we clarify forward-looking statements. Additional information on forward-looking statements can also be found on the SEC filing section of the IR website.

Andre Parize: And before we begin our presentation, please refer to our legal disclaimers on page two, on which we clarify forward-looking statements. Additional information on forward-looking statements can also be found in the SEC filing section of the IR website. Now, I will turn it over to Thiago Maffra. Good evening, Mr. Maffra.

Speaker Change: There is a button below if you want to turn on the translation. And before we begin our presentation, please refer to our legal disclaimers on page 2, on which we clarify forward-looking statements, additional information on forward-looking statements,

Unknown Attendee: You have joined the meeting as an attendee and will be muted throughout the meeting. Thank you very much.

Speaker Change: can also be found on the SEC filing section of the IR website.

Unknown Executive: So now, I will turn it over to Chagum Afra.

Speaker Change: So now, I will turn it over to Thiago Maffra. Good evening, Maffra. Thank you, André. Good evening to all. I appreciate everyone joining us for our 2024 Second Quarter Earnings Call. It's a pleasure to be here tonight.

Thiago Maffra: Thank you, Andre. Good evening to all. I appreciate everyone joining us for our 2024 second quarter earnings call. It's a pleasure to be here tonight.

Chagum Afra: Good evening, Chihuahua. I appreciate everyone drawing us for our 2024 second quarter Ernie's call. It's a pleasure to be here tonight. Let's delve into our quarterly performance and discuss these strategic steps we are undertaking to ensure our continued growth and education to all shareholders.

Thiago Maffra: Let's delve into our quarterly performance and discuss the strategic steps we are undertaking to ensure our continued growth and education for all shareholders. I would also like to extend a warm welcome to Victor Mansur, our new CFO, as this is his first earnings call with us. We are excited to have him on board and look forward to his contributions to our financial strategy and operations. This quarter has been positive for XP.

Thiago Maffra: Let's delve into our quarterly performance and discuss the strategic steps we are undertaking to ensure our continued growth and education to all shareholders.

Chagum Afra: I would also like to extend a warm welcome to Vitor Mansood, our new set full, as Jesus is his first Ernie's call with us. We are excited to have him on board and look forward to his contributions to our financial strategy and operations. This quarter has been positive for XP. We have showcased our ability to generate alpha and achieve growth with growth ability by managing several business levers independently from the challenging conditions. Our total client assets have increased by 14% year-over-year, reaching 1.2 trillion. More importantly, we have observed a re-acceleration in our client net inflow just quarter, details of which we will collaborate on during the presentation.

Speaker Change: I would also like to extend a warm welcome to Victor Massoud, our new CFO, as this is his first earnings call with us.

Speaker Change: We are excited to have him on board and look forward to his contributions to our financial strategy and operations.

Thiago Maffra: We have showcased our ability to generate alpha and achieve growth with profitability by managing several business levers independently from the challenging conditions. Our total client assets have increased by 14% year over year, reaching $1.2 trillion. More importantly, we have observed a re-acceleration in our client's Net Inflow Discharge.

Victor Massoud: This quarter has been positive for XP. We have showcased our ability to generate alpha and achieve growth with profitability by managing several business levers independently from the challenging conditions.

Victor Massoud: Our total client assets have increased by 14% year-over-year, reaching $1.2 trillion. More importantly, we have observed a re-acceleration in our client net inflow this quarter.

Thiago Maffra: Details of which we will elaborate on during the presentation. We have also set a new record in the total number of advisors, reaching 18,300, and continue to expand Brazil's largest investment specialized sales force, growing 11% year over year. Finally, we ended with 4.6 million active clients, marking a 16% increase year-over-year. We had an all-time high in revenue, EBT, and net income. Gross revenue was $4.5 billion for the quarter, up 21% year-over-year.

Victor Massoud: Details of which we will elaborate on during the presentation.

Chagum Afra: We have also set a new record in the total number of advisors reaching 18.3 thousand and continue to expand Brazil's largest investment specialized sales force, growing 11% year-over-year. Finally, we ended with 4.6 million active clients, marking a 16% increase year-over-year. We had our all-time high-end revenue, EBT, and net income. Growth revenue was 4.5 billion for the quarter, up 21% year-over-year. An EBT of 1.4 billion, 43% higher year-over-year, and 1.1 billion in net income, with a margin of 26%. This result reinforced and gives us comfort that we are on track to deliver our growth revenue and EBT margin guidance. We will go into more details on the financials later on.

Victor Massoud: We have also set a new record in the total number of advisors, reaching 18.3 thousand, and continue to expand Brazil's largest investment specialized sales force, growing 11% year over year.

Victor Massoud: Finally, we ended with 4.6 million active clients, marking a 16% increase year-over-year.

Victor Massoud: We had our all-time high in revenue, EBT and net income. Gross revenue was $4.5 billion for the quarter, up 21% year-over-year.

Thiago Maffra: An EBT of $1.4 billion, 43% higher year over year, and $1.1 billion in net income, with a margin of 26%. This result reinforces and gives us comfort that we are on track to deliver our gross revenue and EBT margin guidance in 2026. We'll go into more details on the financials later on, but in terms of balance and profitability, we closed the quarter with a return on tangible equity of 27.2%, the highest in the past two and a half years. Xp's Minas Gerais Basel was at 20.5%.

Victor Massoud: an EBT of 1.4 billion, 43% higher year-over-year and 1.1 billion in net income, with a margin of 26%.

Victor Massoud: This result reinforces and gives us comfort that we are on track to deliver our gross revenue and EBT margin guidance in 2026.

Victor Massoud: We will go into more details on the financials later on.

Chagum Afra: In terms of balance and profitability, we closer the quarter with a return on tangible average of 27.2%, the highest in the past two and a half years. Xp's Minasero Basel was at 20.5% level. The EPS for Q2 2024 was 2.03 reais per share, a 10% increase year over year. Partially, reflecting the share buyback that we have completed in the second quarter, our line-up with our capital return plan to create value to shareholders.

Victor Massoud: In terms of balance and profitability, we closed the quarter with a return on tangible equity of 27.2%, the highest in the past two and a half years.

Thiago Maffra: The EPS for Q2 2024 was R$ 2.03 per share, a 10% increase year over year, partially reflecting the share buyback that we completed in the second quarter, aligned with our capital return plan to create value for shareholders. On the back of so many levers that we have been implementing for growth and with extreme cost control, as has been the case, we are expecting improving results for the second half. Moving on to the next slide, we'll look at our strategy tracker, reminding ourselves here of the main levers of business growth. We'll dig deeper into each of them.

Victor Massoud: XP's Minas Gerais Basel was at 20.5% level. The EPS for Q2 2024 was R$ 2.03 per share, a 10% increase year-over-year.

Victor Massoud: partially reflecting the share buyback that we have completed in the second quarter, aligned with our capital return plan to create value to shareholders.

Chagum Afra: On the back of so many levels that we have been implementing for growth and with extreme cost control, as it has been the case, we do our expected improving results for the second hot. Moving on to the next slide, we will look at our strategy tracker, reminding here the main levels of business growth. We will dig deeper in each of them. Also, we would like to highlight our growth revenue and EBT margin. If you remember our Investor Day, back in December, we have shown our last 12 months' growth revenue as 14.8 billion. And since then, we have increased our growth revenue to 17.4 billion LGM, with an implied 25% CAGR.

Victor Massoud: On the back of so many levers that we have been implementing for growth and with extreme cost control, as it has been the case, we do are expecting improving results for the second half.

Victor Massoud: Moving on to the next slide.

Victor Massoud: We'll look at our strategy tracker, reminding here the main levers of business growth.

Thiago Maffra: Also, we would like to highlight our gross revenue and EBT margin. If you remember our investor day, back in December, we showed our last 12 months' gross revenue as $14.8 billion, and since then, we have increased our gross revenue to $17.4 billion LTM, with an implied 25% CAGR. In order to reach the top of the guidance, we need, from now on, a 19% CAGR until 4Q26.

Victor Massoud: We'll dig deeper in each of them.

Victor Massoud: Also, we would like to highlight our gross revenue and EBT margin.

Victor Massoud: If you remember our investor day...

Victor Massoud: Back in December, we have shown our last 12 months gross revenue as $14.8 billion.

Victor Massoud: And since then, we have increased our gross revenue to $17.4 billion LTM, with an implied 25% CAGR.

Chagum Afra: In order to reach the top of the guidance, we need from now on a 19% cager and Q4Q26. Regarding our LGM, EBT margin, we have reached 28.1% at 180 beeps expansion compared to our 30 quarter 2023 LGM figures, indicating that we are in the right base to reach the 30 to 34% target range in 2026.

Victor Massoud: In order to reach the top of the guidance, we need, from now on, a 19% CAGR until 4Q26.

Thiago Maffra: Regarding our LTM EBT margin, we have reached 28.1%, a 180 Bps expansion compared to our 30 quarter 2023 LTM figures, indicating that we are on the right pace to reach the 30 to 34% target range in 2026. Now, starting with retail investment. In Jesus' light, our goal is to establish ourselves as leaders in investments, which is our core business. As highlighted in the first slide, a key achievement this quarter was the improvement in net new money. We recorded $32 billion in net new money for the quarter, with $24 billion coming from retail.

Victor Massoud: Regarding our LTM EBT margin, we have reached 28.1% at 180 BPS expansion compared to our 30 quarter 2023 LTM figures.

Victor Massoud: indicating that we are in the right pace to reach the 30 to 34% target range in 2026.

Chagum Afra: Now, starting with repaying investments. In Jesus' light, our goal is to establish ourselves as leaders in investments, which is our core business. As highlighted in the first slide, a key achievement this quarter was the improvement of net new money. We record 32 billion in net new money for the quarter, with 24 billion coming from retail. This means that in retail, we nearly double quarter over quarter. We attribute this improvement to several factors, but primarily, we believe this improvement is a result of effectively executing the levers we can throw. These levers include first, product platform, the largest investment platform in Brazil, which continues should be a major differentiator through or constant innovation.

Victor Massoud: Now, starting with retail investments.

Speaker Change: In Jesus' light, our goal is to establish ourselves as leaders in investments, which is our core business.

Speaker Change: As highlighted in the first slide, a key achievement this quarter was the improvement of net new money. We record $32 billion in net new money for the quarter, with $24 billion coming from retail.

Thiago Maffra: This means that in retail, we nearly doubled quarter over quarter. We attribute this improvement to several factors. But primarily, we believe this improvement is a result of effectively executing the levers we control, including levers.

Speaker Change: This means that in retail, we nearly doubled quarter over quarter.

Speaker Change: We attribute this improvement to several factors, but primarily we believe this improvement is a result of effectively executing the levers we control. These levers include, first, product platform.

Thiago Maffra: First Product Platform. The largest investment platform in Brazil, which continues to be a major differentiator through our constant innovation. And in this environment, our fixed income platform is expected to maintain its protagonism in the market.

Speaker Change: The largest investment platform in Brazil, which continues to be a major differentiator to our constant innovation.

Chagum Afra: And in this environment, our fixed income platform is expected to maintain its protagonist in the market. And part of this competitive edge is related to our efforts in structuring and warehousing new assets for retail distribution through our wholesale banking. Second, diversification and expansion of channels. Few years ago, we launched the Internal Advisors' Model, becoming a dual distribution channel business. And today, as we speak, we have voted to a multi-channel distribution, with IFAs, internal advisors, consultants through our RIA channel and the GIFT channel. At the same time that we have been growing our IFA channel, we already have around 2,000 internal advisors and 1,000 RIAs.

Speaker Change: And in this environment, our fixed income platform is expected to maintain its protagonism in the market.

Thiago Maffra: And part of this competitive edge is related to our efforts in structuring and warehousing new assets for retail distribution through our wholesale banking. Second, diversification and expansion of channels. A few years ago, we launched the Internal Advisors model, becoming a dual distribution channel business.

Speaker Change: and part of this competitive edge is related to our efforts in structuring and warehousing new assets for retail distribution through our wholesale banking.

Speaker Change: Second, diversification and expansion of channels.

Speaker Change: A few years ago, we launched the Internal Advisors model, becoming a dual distribution channel business.

Thiago Maffra: And today, as we speak, we have moved to a multi-channel distribution with IFAs, internal advisors, consultants to our RIA channel, and a digital channel. At the same time that we have been growing our IFA channel, we already have around 2,000 internal advisors and 1,000 RIAs. Our RAU channel, for example, represents 10% or more than 100 billion of our total client assets. All the new channels combined represent around 50% of our total retail client assets.

Speaker Change: And today, as we speak, we have moved to a multi-channel distribution with IFAs, internal advisors, consultants through our RIA channel, and the digital channel.

Speaker Change: At the same time that we have been growing our IFA channel, we already have around 2,000 internal advisors and 1,000 RIAs.

Chagum Afra: Or RIA channel, for example, a red represents 10% or more than 100 billion of total client assets. All the new channels, combined, represent around 50% of our total retail client assets. Third, focus on productivity. Through our empowering tools for advisors, such as the Hub, Xp Academy, and the provision of data and intelligence to the Salesforce, ensuring their long-term success. Lastly, it's worth mentioning the continuous evolution of the company's mindset, transitioning from a product distribution firm to a services provider. To shift permeates all areas, including the entire Salesforce, aligning with or quality initiatives and financial planning; catalyze it by opening vastness.

Speaker Change: Our RAU channel, for example, a red represents 10% or more than 100 billion of our total client assets.

Speaker Change: All the new channels combined represent around 50% of our total retail client assets.

Thiago Maffra: Folks on Productivity, through empowering tools for advisors, such as the Hub and XP Academy, and the provision of data and intelligence to the sales force, ensuring their long-term success. Lastly, it's worth mentioning the continuous evolution of the company's mindset. Transitioning from a product distribution firm to a service provider, this shift permeates all areas, including the entire sales force, aligning with our quality initiative and financial planning, catalyzed by Open Invest. And now, our cross-siding initiative.

Speaker Change: 3. Bruno Santos, Thiago Maffra, Bruno Santos, Thiago Maffra, Bruno Santos, Thiago Maffra,

Speaker Change: focus on productivity through empowering tools for advisors such as the hub, XP Academy, and the provision of data and intelligence to the sales force, ensuring their long-term success.

Thiago Maffra: This quarter, the results will be presented by our CEO, Thiago Maffra, and our CEO for Victor Mansur, who will both be available for the Q&A session right after the presentation. If you want to ask a question, you can raise your hand at the Zoom tool, and we will attend you on a first-come, first-served basis. We also have the option of simultaneous translation to portuguese. There is a button below if you want to turn on the translation.

Speaker Change: Lastly, it's worth mentioning the continuous evolution of the company's mindset, transitioning from a product distribution firm to a service provider.

Thiago Maffra: And before we begin our presentation,[inaudible] Thank you very much. Thank you very much. [inaudible] We will go into more details on the financials later on. In terms of balance and profitability, we closer the quarter with a return on tangible average of 27.2% the highest in the past two and a half years. Xp's Minasero Basel was at 20.5% level. The EPS for Q2 2024 was 2.03 reais per share, a 10% increase year over year.

Speaker Change: This shift permeates all areas, including the entire sales force, aligning with our quality initiative and financial planning, catalyzed by open investments.

Chagum Afra: And now, we're cross-fading initiatives. We are leading to the development of the company, and the development of the company, and the development of the company.

Thiago Maffra: We are leading. Another business that presents an opportunity ahead is insurance. We are currently less than 2% penetrated, and we expect to grow 3 to 4 times over the next year. But still, our total return premiums have seen a 52% increase year-over-year, reaching R$ 307 million in the quarter.

Speaker Change: and now our cross-siding initiatives.

Speaker Change: We are leading...

Speaker Change: [inaudible]

Speaker Change: Another business that presents an opportunity ahead is insurance.

Chagum Afra: A modern business that presents an opportunity ahead is insurance. We are currently less than 2% penetrated, and we expect to grow three to four times over the next years. It's true, our total retail premiums have seen a 52% increase year over year, reaching 307 million reais in the court. Oretirement Blans, we keep presenting market share gains, growing our client assets by 18% euro over the year, but a 5% market share, and also a 5% penetration. Combined effects, global investments, and gish.com grew 51% year over year, with 104 million in revenues just quarter, and we have a clear plan for each one of them to keep growing.

Speaker Change: We are currently less than 2% penetrated and we expect to grow 3 to 4 times over the next years.

Speaker Change: Still, our total return premiums had seen a 52% increase year-over-year, reaching R$307 million in the quarter.

Thiago Maffra: On Retirement Plans, we keep presenting market share gains, growing our client assets by 18% year-over-year with a 5% market share and also a 5% penetration rate. Combined, FX, Global Investments, and Digital Accounts grew 51% year-over-year, with $104 million in revenues this quarter, and we have a clear plan for each one of them to keep growing. And finally, the corporate and SMB clients. We have been able to maximize our corporate and SMB clients by leveraging the relationships built with our network of advisors and our investment banking business. We have reached more than 60,000 active clients.

Speaker Change: On retirement plans, we keep presenting market share gains, growing our client assets by 18% year-over-year, with a 5% market share and also a 5% penetration.

Speaker Change: Combined, FX, Global Investments and Digital Accounts grew 51% year-over-year, with $104 million in revenues this quarter.

Speaker Change: and we have a clear plan for each one of them to keep growing.

Chagum Afra: And finally, the corporate and SMB, we have been able to maximize our corporate and SMB clients by leveraging the relationship built with network of advisors and our investment banking business. We have reached more than 60,000 active clients. It's important to highlight that corporate and SMB client base grew 22% year over year, and we continue to improve penetration with effects, derivatives, and loans. It's worth mentioning that in the river chiefs we improved from 10th to 5th position during the last 2 years, and only effects we also improved moving from 41st to 16th ranking position during the last 40 years.

Speaker Change: and finally the corporate and SMB.

Speaker Change: We have been able to maximize our corporate and SMB clients by leveraging the relationship built with our network of advisors and our investment banking business.

Speaker Change: We have reached more than 60,000

Thiago Maffra: It's important to highlight that the corporate and SMB client base grew 22% year over year, and we continue to improve penetration with effects, derivatives, and loans. It's worth mentioning that in derivatives, we improved from 10th to 5th position during the last two years. And on FX, we also improved, moving from 41st to 16th in the last 4 years.

Speaker Change: It's important to highlight that corporate and SMB client base grew 22% year over year.

Speaker Change: and we continue to improve penetration with effects, derivatives, and loans.

Speaker Change: It's worth mentioning that in derivatives, we improved from 10th to 5th position during the last two years.

Speaker Change: And on effects, we also improved, moving from 41st to 16th ranking position during the last 4 years.

Chagum Afra: As a result, we have been able to grow corporate growth revenue by 50% Kager, 2nd quarter 24, last 12 months, versus 3rd quarter 23, last 12 months, when we held our Investor Day. We have just launched the corporate digital account in August, and we will launch trade finance soon, reinforcing or cross-sell opportunities for the next years.

Thiago Maffra: As a result, we have been able to grow corporate gross revenue by 50% CAGR in second quarter 24 last 12 months versus third quarter 23 last 12 months when we held our investor day. We have just launched the Corporate Digital Account in August, and we will launch Trade Finance soon, reinforcing our cross-sell opportunities for the next years. Victor will give more details about the revenue growth. Now, I will hand it over to Victor so he can discuss this quarter's financials. Thank you. Thanks, Maffra. Good evening, everyone.

Speaker Change: As a result, we have been able to grow corporate gross revenue by 50% CAGR, second quarter 24, last 12 months, versus

Thiago Maffra: Partially, reflecting the share by back that we have completed in the second quarter, our line-up with our capital return plan to create value to share holders. On the back of so many levels that we have been implementing for growth and with extreme cost control as it has been the case, we do our expected improving results for the second hot.

Speaker Change: Third quarter, 23, last 12 months, when we held our investor day.

Speaker Change: We have just launched the Corporate Digital Account in August and we will launch Trade Finance soon, reinforcing our cross-sell opportunities for the next years.

Chagum Afra: Vitor will give more details about the revenue growth. Now, I will hand it over to Vitor, so he can discuss just quarter financials. Thank you.

Vitor: Vitor will give more details about the

Vitor: Now, I will hand it over to Vitor so he can discuss this quarter financials. Thank you.

Thiago Maffra: Moving on to the next slide, we will look at our strategy tracker, reminding here the main levels of business growth. We will dig deeper in each of them. Also, we would like to highlight our growth revenue and EBT margin. If you remember our investor day, back in December, we have shown our last 12 months growth revenue as 14.8 billion. And since then, we have increased our growth revenue to 17.4 billion LGM, with an implied 25% cager.

Victor Mansur: Thanks, Mafra.

Victor Mansur: It's a pleasure to be here with you, as this is my first earnings call. Before I go to the second quarter numbers, I think it would be interesting to share three pillars we are focused on for the years to come. First, a short-term objective or corporate restructuring.

Victor Mansur: Good evening, everyone. It's a pleasure to be here for you.

Victor Mansur: As this is my first earnings call, before I go to the 2nd quarter in numbers, I think it would have been better to share our 3 pillars we are focused on for the years to come. First, a short-term objective: our corporate restructuring. As you know, we have a banking or ecosystem, and having a bank can provide us higher leverage and lower costs. At the same time, it can structure new products. To get all the benefits of having a banking or in the ecosystem, we have started the corporate reorganization last year to have XP Bank as the parent company in Brazil when completed.

Vitor: Thanks Maffra. Good evening everyone. It's a pleasure to be here with you. As this is my first earnings call, before I go to the second quarter numbers, I think it would be interesting to share three pillars we are focused on for the years to come.

Vitor: First, a short-term objective, or corporate restructuring. As you know, we have a bank in our ecosystem, and having a bank can provide us higher leverage and lower costs. At the same time, we can structure new products.

Victor Mansur: As you know, we have a bank in our ecosystem, and having a bank can provide us with higher leverage and lower costs. At the same time, we can structure a new product. To get all the benefits of having a bank in the ecosystem, we started a corporate organization last year to have XpBank as the parent company in Brazil when it is completed. This will provide a lower cost of capital by increasing our ability to issue Tier 1 and Tier 2 bonds. The process if the central bank is flowing is expected, and we should have it completed by the end of the year.

Vitor: To get all the benefits of having a bank in the ecosystem, we have started a corporate organization last year to have XP Bank as the parent company in Brazil when completed.

Thiago Maffra: In order to reach the top of the guidance, we need from now on a 19% cager and Q4Q26. Regarding our LGM, EBT margin, we have reached 28.1% at 180 beeps expansion compared to our 30 quarter 2023 LGM figures, indicating that we are in the right base to reach the 30 to 34% target range in 2026.

Victor Mansur: This will provide lower cost of capital, by increasing our ability to issue, cure one and cure two debt.

Vitor: This will provide lower cost of capital by increasing our ability to issue tier 1 and tier 2 debt. The process if the central bank is flowing is expected and we should have it completed by the end of the year.

Victor Mansur: The process if the central bank is flowing is expected, and we should have it completed by the end of the year.

Victor Mansur: Second, a mid-term objective, our guidance delivery, EBT margin expansion should come to new products increasing profitability, as they evolve in their ecosystem, coupled with a strict cost discipline, if out-harming innovation, which is part of our DNA. Third, our long-term objective, capital allocation, we understand that having a continuous capital management through discipline, capital allocation, and return capital to shareholders is key for our long-term goals. XP is a profitable company, generates cash, and does not need to invest 100% of its profit to grow. Capitol location decisions are based on ROE, profitability, and connection for a long-term strategy.

Victor Mansur: Second, a mid-term objective, our guidance delivery. EBT margin expansion should come through new products increasing profitability as they evolve in the ecosystem coupled with a strict cost discipline without harming innovation, which is part of our DNA. And third, a long-term objective, capital allocation. We understand that through continuous capital management through disciplined capital allocation and return of capital to shareholders, Xp is a profitable company, generates cash, and does not need to reinvest 100% of its profit to grow. Capital location decisions are based on ROE, profitability, and connection for long-term strategy.

Vitor: Second, a mid-term objective, or guidance delivery, EBT margin expansion should come through new products increasing profitability as they evolve in the ecosystem, coupled with a strict cost discipline, without harming innovation, which is part of our DNA.

Vitor: And third, a long-term objective, capital allocation. We understand that having a continuous capital management through disciplined capital allocation and return capital to shareholders is key for our long-term goals.

Thiago Maffra: Now, starting with repaying investments. In Jesus' light, our goal is to establish ourselves as leaders in investments, which is our core business. As highlighted in the first slide, a key achievement this quarter was the improvement of net new money. We record 32 billion in net new money for the quarter with 24 billion coming from retail. This means that in retail, we nearly double quarter over quarter. We attribute this improvement to several factors, but primarily, we believe this improvement is a result of effectively executing the levers we can throw.

Vitor: XP is a profitable company, generates cash, and does not need to reinvest 100% of its profit to grow. Capital allocation decisions are based on ROE, profitability, and connection for a long-term strategy.

Victor Mansur: The combination of these initiatives should lead to higher returns going forward.

Vitor: The combination of these initiatives should lead to higher returns going forward. I think it would be interesting to share three pillars we are focusing on for the years to come. And now, let's go to the numbers.

Victor Mansur: The combination of these initiatives should lead to higher returns going forward. I think it would be interesting to share the three pillars we are focusing on for the years to come. And now, let's go to the numbers. Total Gross Revenue grew 21% year-over-year and 5% quarter-over-quarter. Once again, Xp posted positive performance in capital markets, reflected both in retail, especially fixed income, and corporate-issue services. However, constitutional revenue was slightly lower quarter over quarter.

Victor Mansur: I think it would be interesting to share three pillars we are focusing on for the years you come.

Victor Mansur: And now let's go to the numbers. Total positive performance in capital markets reflected both in retail, especially fixed income, and corporate issue services. The institutional revenue was slightly lower, quite a little bit quieter. On the right hand side of this line we can see our grass revenue breakdown, and the trend is still the same as last quarter when corporate issue services increase their participation on total grass revenues.

Vitor: Total Gross Revenue grew 21% year-over-year and 5% quarter-over-quarter. Once again, XP posted positive performance in capital markets, reflected both in retail, especially fixed income, and corporate-issue services.

Thiago Maffra: These levers include first, product platform, the largest investment platform in Brazil, which continuous should be a major differentiator through or constant innovation. And in this environment, our fixed income platform is expected to maintain its protagonist in the market. And part of this competitive edge is related to our efforts in structuring and warehousing new assets for retail distribution through our wholesale banking.

Vitor: Institutional revenue was slightly lower quarter over quarter. On the right-hand side of the slide, we can see our gross revenue break down. And the trend is still the same of last quarter when corporate issue services increased their participation on total gross revenues.

Victor Mansur: On the right-hand side of the slide, we can see our gross revenue breakdown, and the trend is still the same as last quarter, when corporate issued services increased their participation in total gross revenues. Let's move to the next slide with more details on retail. Retail revenue achieved is $3.3 billion, a 14% growth year-over-year and a 5% growth quarter-over-quarter.

Victor Mansur: Let's move to the next slide if more details on retail. Retail revenue achieved in 3.3 billion, a 14% growth year over year, and a 5% growth quarter over quarter. Fixed income was the main highlight, with a 42% growth year over year and a 17% growth quarter over quarter, which was driven by our capacity to develop new products, including corporate credit and structural notes through primate offerings, and our capacity to provide the liquid in the secondary market, considering our higher than 60% market share in most of the goods.

Vitor: Let's move to the next slide with more details on retail. Retail revenue achieved is $3.3 billion, a 14% growth year-over-year, and a 5% growth quarter-over-quarter.

Thiago Maffra: Second, diversification and expansion of channels. Few years ago, we launched the Internal Advisors' Model, becoming a dual distribution channel business. And today, as we speak, we have voted to a multi-channel distribution, with IFAs, Internal Advisors, consultants through our RIA channel and the GIFT channel. At the same time that we have been growing our IFA channel, we already have around 2,000 Internal Advisors and 1,000 RIAs. Or RIA channel, for example, a red represents 10% or more than 100 billion of for total client assets. All the new channels, combined, represent around 50% of our total retail client assets.

Victor Mansur: Fixed income was the main highlight, with a 42% growth year-over-year and a 17% growth quarter-over-quarter, which was driven by our capacity to develop new products, including corporate credits and structural notes through primary offerings, and our capacity to provide liquidity in the secondary market, considering our higher-than-50% market share in most of the security. Moving on to the next slide, we will talk about corporate and industry services revenue. Corporate and Issue Services posted an all-time high revenue, achieving $629 million in the quarter, which represents 122% growth year-over-year and 24% growth quarter-over-quarter.

Vitor: Fixed income was the main highlight if a 42% growth year over year and a 17% growth quarter over quarter.

Vitor: which was driven by our capacity to develop new products, including corporate credits and structural notes through primary offerings, and our capacity to provide the liquid in the secondary market, considering our higher than 50% market share in most of the securities.

Victor Mansur: Moving on to the next slide, we will talk about Corporate and Industry Services revenue. Corporate and industry services posted an outtime of high revenue, achieving 629 million in the quarter, which represents 122% growth year over year, and 24% growth quarter over quarter. Issued services continue to present a fast base of DCM activity, posting higher revenues than last quarter and reaching 384 million, a 145% growth year over year and a 37% growth quarter over quarter. By having a consolidated investment banking business in solid credit issues, we can reach our corporate clients. In that sense, corporate presented the same trend of last quarter; if transactional revenues grown on the back of the derivatives and the facts.

Vitor: Moving on to the next slide, we will talk about corporate and interest services revenue.

Vitor: Corporate and issue services posted an all-time high revenue, achieving $629 million in the quarter, which represents 122% growth year-over-year and 24% growth quarter-over-quarter. Issue services continue to present a fast pace of DCM activity.

Victor Mansur: Issue Services continues to present a fast pace of DCM activity, posting higher revenues than last quarter and reaching $384 million, a 145% growth year-over-year and a 37% growth quarter-over-quarter. By having a consolidated investment banking business with solid credentials, we can reach our corporate clients to cross-sell. In that sense, corporate presented the same trend of last quarter, with transactional revenues growing on the back of derivatives and effects. Corporate posted $245 million in the quarter, a 94% growth year-over-year and 7% growth quarter-over-quarter.

Thiago Maffra: Third, focus on productivity. Through our empowering tools for advisors, such as the Hub, Xp Academy, and the provision of data and intelligence to the Salesforce, ensuring their long-term success.

Vitor: posting higher revenues than last quarter and reaching $384 million, a 145% growth year-over-year and a 37% growth quarter-over-quarter.

Speaker Change: By having a consolidated investment banking business with solid credentials, we can reach our corporate clients to cross-sell. In that sense, corporate presents the same trend of last quarter, with transactional revenues growing on the back of derivatives and FX.

Thiago Maffra: Lastly, it's worth mentioning the continuous evolution of the company's mindset, transitioning from a product distribution firm to a services provider. To shift permeates all areas, including the entire Salesforce, aligning with or quality initiatives and financial planning, catalyze it by opening vastness.

Victor Mansur: Corporate posted 204.5 million in the quarter, a 94% growth year over year, and a 7% growth quarter over quarter. On the right-hand side of this slide, we're explaining a little later the cycle and referring tune, which connects both our retail, corporate, and investment banking business. XP low on book is primarily focus on supporting our warehouse business, making sure it's paving the way to our retail distribution. In the squatter, we originated 10 billion new corporate securities warehouses in your balance sheet. In time, those securities will be sold to our retail clients, and this revenue will show as fixed income.

Speaker Change: Corporate posted $245 million in the quarter, a 94% growth year-over-year and a 7% growth quarter-over-quarter. On the right-hand side of the slide, we explain a little better the cycle I'm referring to.

Victor Mansur: On the right-hand side of the slide, we explain a little better the cycle I'm referring to, which connects both our retail and corporate investment banking business. The Xp loan book is primarily focused on supporting our warehouse business, making sure it's paving the way for our retail distribution. In this quarter, we originated 10 billion new corporate securities warehoused on our balance sheet.

Thiago Maffra: And now, we're cross-fading initiatives. We are leading to the development of the company, and the development of the company, and the development of the company.

Speaker Change: We've connected both our retail and corporate and investment banking business.

Speaker Change: XP Loan Book is primarily focused on supporting our warehouse business.

Speaker Change: making sure it's paving the way to our retail distribution. In this quarter, we originated 10 billion new corporate securities warehoused in your balance sheet. In time, those securities will be sold to our retail clients, and this revenue will show as fixed income.

Victor Mansur: In time, those securities will be sold to our retail clients, and this revenue will show as fixed income. Finally, by having market-making capabilities, we can also recycle this risk and provide liquidity to our different types of clients. Maximizing the return on our balance sheet. Moving on to the next slide, we will explore SG&A and efficiency ratios. Cost discipline and efficiency are priorities in your business to keep XP competitive. With that in mind, we achieved the best efficiency ratio since the APO at 36.1%, 220 base points better year over year, and 40 base points better quarter over quarter. SG&A X incentives reached $1.4 billion in the second quarter of 2024, a growth of 14% year-over-year and flattish quarter-over-quarter.

Victor Mansur: Finally, by having the market-making capabilities, we can also recycle this risk and provide a liquid to our different types of clients, maximizing the return of our balance.

Speaker Change: Finally, by having the market-making capabilities, we can also recycle this risk and provide the liquid to our different types of clients.

Victor Mansur: Richard.

Victor Mansur: Moving on to the next slide, we will explore our SCGNA and efficiency ratios. Across discipline and efficiency, I priority your business to keep Xp competitive. If that's in mind, we achieved the best efficiency ratio since the April, of 36.1%, to 120 base points better year-to-year and 40 base points better and quieter over-quarter. SCGNA X incentives reached 1.4 billion in the second quarter of 2024, a growth of 14% year-over-year and flatish quarter-over-quarter.

Speaker Change: maximizing the return of a balance sheet.

Speaker Change: Moving on to the next slide, we will explore our estrogen A and deficiency ratios.

Speaker Change: Cross-discipline and efficiency are priorities in your business to keep XP competitive.

Speaker Change: With that in mind, we achieved the best efficiency ratio since the IPO with 36.1%, 220 base points better year over year and 40 base points better quarter over quarter.

Speaker Change: SG&A X incentives reached $1.4 billion in the second quarter of 2024, a growth of 14% year-over-year and flattish quarter-over-quarter.

Thiago Maffra: A modern business that presents an opportunity ahead is insurance. We are currently less than 2% penetrated, and we expect to grow three to four times over the next years. It's true, our total retail premiums have seen a 52% increase year over year, reaching 307 million reais in the court. Oretirement Blans, we keep presenting market share gains, growing our client assets by 18% Euro over the year, but a 5% market share, and also a 5% penetration. Combined effects, global investments, and gish.com grew 51% year over year, with 104 million in revenues just quarter, and we have a clear plan for each one of them to keep growing.

Victor Mansur: Bear in mind that in the second quarter of 2023, we didn't have modal SG&A in your finance. This strict cost discipline, along with our innovation initiatives, will allow us to keep expanding our EBT margin in the direction of our guidance. EBT achieved the highest level in the industry, a combination of rising ecosystem revenues and strict expense control, reaching $1.4 billion.

Victor Mansur: Bear in mind that, on the second quarter of 2023, we didn't have model SCGNA in your financials. The strict cost discipline, along with our innovation initiatives, we were always to keep expanding our EBT margin in direction of our guidance. EBT achieved the highest level in your industry, a combination of a rise in ecosystem revenues and the strict expense control reaching 1.4 billion. This represents a growth of 43% year-over-year and 27% quarter-over-quarter, driving our EBT margin to 32.8%, a 500 and 52 basis points growth year-over-year and a 509 basis points growth quarter-over-quarter. On a last 12 months basis, our EBT margin reached 28.1%.

Speaker Change: Bear in mind that on the second quarter of 2023 we didn't have Modal SHNA in your financials.

Speaker Change: This strict cost discipline, along with our innovation initiatives, will allow us to keep expanding our EBT margin in direction of our guidance.

Speaker Change: EBT achieved the highest level in European history, a combination of a rising ecosystem revenues and strict expense control, reaching $1.4 billion.

Victor Mansur: This represents a growth of 43% year over year and 27% quarter over quarter, driving our EBITDA margin to 32.8%, a 552 base points growth year over year and a 509 base points growth quarter over quarter. On a last-12-month basis, our EBT margin reached 28.1%. We expect to improve our EBT margin on an annual basis toward our guidance in 2026. Let's see our net income on the next slide. We also achieved the highest net income in Euro-Eastern, $1.1 billion in the second quarter of 2024, growing 14% year-over-year and 9% quarter-over-quarter. Net margin posted 26.5% in the second quarter, a decrease of 103 base points year-over-year and an increase of 110 base points quarter-over-quarter.

Speaker Change: This represents a growth of 43% year-over-year and 27% quarter-over-quarter.

Speaker Change: driving our EBT margin to 32.8%, a 552 base points growth year-over-year, and a 509 base points growth quarter-over-quarter.

Speaker Change: on a last-12-month basis.

Victor Mansur: We expect to improve our EBT margin on an annual basis toward our guidance in 2022.

Speaker Change: Our EBT margin reached 28.1%.

Thiago Maffra: And finally, the corporate and SMB, we have been able to maximize our corporate and SMB clients by leveraging the relationship build with network of advisors and our investment banking business. We have reached more than 60,000 active clients. It's important to highlight that corporate and SMB client base grew 22% year over year, and we continue to improve penetration with effects, derivatives, and loans. It's worth mentioning that in the river chiefs we improved from 10th to 5th position during the last 2 years, and only effects we also improved moving from 41st to 16th ranking position during the last 40 years. As a result, we have been able to grow corporate growth revenue by 50% Kager, 2nd quarter 24, last 12 months, versus 3rd quarter 23, last 12 months, when we held our investor day.

Speaker Change: We expect to improve our EBT margin on an annual basis toward our guidance in 2026.

Victor Mansur: Let's see our net income on the next slide. We also achieved the highest net income in your history, 1.1 billion in the second quarter of 2024, growing 14% year-over-year and 9% quarter-over-quarter. Net margin posted 26.5% in the second quarter, a decrease of 103 basis points year-over-year, and then an increase of 100 and 10 basis points quarter-over-quarter. As we mentioned in the investor day, we expect XB effective X-rate on a last 12 month basis to gradually increase over time due to revenue mix.

Speaker Change: Let's see our net income on the next slide.

Speaker Change: We also achieved the highest net income in our history, $1.1 billion in the second quarter of 2024, growing 14% year over year and 9% quarter over quarter. Net margin posted

Speaker Change: 26.5% in the second quarter, a decrease of 103 base points year-over-year, and an increase of 110 base points quarter-over-quarter.

Victor Mansur: As we mentioned in the investor day, we expect Xp to affect the X rate on a last 12 month basis and to gradually increase over time, due to Curaçao, corporate, and SMB businesses keep evolving and present a higher tax rate.

Speaker Change: As we mentioned in the investor day, we expect the expected tax rate on a last 12-month basis to gradually increase over time due to the revenue mix.

Victor Mansur: Since Crossell and corporate SMB business keep evolving and present a higher tax rate, let's move on to the next slide to talk about capital management. As I already mentioned, an efficient capital management is key to achieve our long-term objectives. During the last two and a half years, we have distributed over 7.5 billion through dividends and share buy-backs. Those distributions are connected to our strategy returns part of the excess capital at XB in level to shareholders, while keeping a conservative basal index. As we mentioned in your investor day, we intend to reduce it across the years between 16% to 19%.

Speaker Change: sees Crossell and corporate and SMB business keep evolving and present a higher tax rate.

Victor Mansur: Let's move on to the next slide to talk about capital management. As I already mentioned, efficient capital management is key to achieve our long-term objective. During the last two and a half years, we have distributed over 7.5 billion through dividends and share buyback. Those distributions are connected to our strategy to return part of the excess capital at the XPE-INC level to shareholders, while keeping a conservative basal index.

Speaker Change: Let's move on to the next slide to talk about capital management.

Speaker Change: As I already mentioned, an efficient capital management is key to achieve our long-term objectives.

Speaker Change: During the last two and a half years we have distributed over 7.5 billion through dividends and share buybacks.

Thiago Maffra: We have just launched the corporate digital account in August, and we will launch trade finance soon, reinforcing or cross sell opportunities for the next years.

Speaker Change: Those distributions are connected to our strategy to return part of the excess capital at XP Inc. level to shareholders, while keeping a conservative Basel Index.

Victor Mansur: Vitor will give more details about the revenue growth.

Victor Mansur: As we mentioned on your investor day, we intend to reduce it across the years between 16% to 19%. Those initiatives together for net income growth result in higher returns going forward, as we are going to see in the next slide. You can see the evolution of our earnings per share posting solid growth and achieving 2.03 reais, a 10% year-over-year and a 90% quarter-over-quarter. During the second quarter of 2024, Xp posted 27.2% in ROTE; it's an increase of 310 base points year-over-year and 108 base points quarter-over-quarter.

Thiago Maffra: Now, I will hand it over to Vitor, so he can discuss just quarter financials. Thank you.

Speaker Change: As we mentioned in your investor day, we intend to reduce it across the years between 16 to 19 percent.

Victor Mansur: Those initiatives together, if for a net income growth result, in a higher returns going forward, as we are going to see in the next slide. You can see the evolution of R&S per share of posting as solid growth and achieving 2.03 reais, a 10% year-over-year and a 90% quarter-over-quarter. During the second quarter of 2024, XB posted 27.2% in ROTE. If we increase off to 110 base points year-over-year and 108 base points quarter-over-quarter. We believe that ROTE presents a better comparison to peers in Brazil to be our gap on IFRS differences.

Victor Mansur: Thanks, Mafra.

Victor Mansur: Good evening everyone. It's a pleasure to be here for you.

Speaker Change: Those initiatives together for a net income growth

Speaker Change: result in higher returns going forward, as we are going to see in the next slide. You can see the evolution of our earnings per share posting a solid growth and achieving R$ 2.03, a 10% year-over-year and a 90% quarter-over-quarter.

Speaker Change: During the second quarter of 2024, XP posted

Victor Mansur: To get all the benefits of having a banking or in the ecosystem, we have started the corporate reorganization last year to have XP bank as the parent company in Brazil when completed. This will provide lower cost of capital, by increasing our ability to issue, cure one and cure two debt. The process if the central bank is flowing is expected, and we should have it completed by the end of the year.

Speaker Change: 27.2% in ROTE. It's an increase of 310 base points year over year and 108 base points quarter over quarter. We believe that ROTE presents a better comparison to peers in Brazil.

Thiago Maffra: We believe that ROTE presents a better comparison to peers in Brazil due to the BR gap and IFRS differences. Now, I turn over to Maffra for his final remarks. We had a solid quarter with revenue growth and operating leverage. This combination gives us confidence that we are on track to deliver our 2026 guidance. All initiatives, from distribution channel diversification to sales force expansion, are proving that we are in the right direction to deliver a higher level of net new money compared to last year.

Chagum Afra: Now, I turn over to Mafra for his final remarks. We have a solid quarter with revenue growth and operating leverage. This combination gives us confidence that we are on track to deliver our 2026 guidance. All initiatives from distribution channel diversification to Salesforce expansion are proving that we are in the right direction to deliver our higher level of net new money compared to last year.

Maffra: due to VR gap and IFRS differences. Now, I turn over to Maffra for his final remarks.

Victor Mansur: Second, a mid-term objective, our guidance delivery, EBT margin expansion should come to a new products increasing profitability, as they evolve in their ecosystem, coupled with a strict cost discipline, if out-harming innovation, which is part of our DNA. Third, our long-term objective, capital allocation, we understand that having a continuous capital management through discipline, capital allocation and return capital to shareholders is key for our long-term goals. XP is a profitable company, generates cash and does not need to invest 100% of its profit to grow. Capitol location decisions are based on ROE, profitability and connection for a long-term strategy. The combination of these initiatives should lead to higher returns going forward.

Maffra: We had a solid quarter with revenue growth and operating leverage.

Maffra: This combination gives us confidence that we are on track to deliver our 2026 guidance.

Maffra: All initiatives, from distribution channel diversification to sales force expansion, are proving that we are in the right direction to deliver a higher level of net new money compared to last year.

Chagum Afra: Finally, we believe that we are keeping and enhancing our modes by first offering the best product platform in the country, ensuring that our customers have access to an unmatched range of solutions. Second, empowering the largest and best-strained Salesforce in the industry. Third and last, evolving our company's value proposition to a new level of service excellence, moving beyond the traditional product distribution model to a far more sophisticated and valued driven approach through financial planning.

Thiago Maffra: Finally, we believe that we are keeping and enhancing our modes by... First, offering the best product platform in the country, ensuring that our customers have access to an unmatched range of solutions. Second, empowering the largest and best trained sales force in the industry.

Maffra: Finally, we believe that we are keeping and enhancing our modes by

Maffra: First, offering the best product platform in the country, ensuring that our customers have access to an unmatched range of solutions.

Maffra: Second, empowering the largest and best trained sales force in the industry.

Andre Parize: Third and last, evolving our company's value proposition to a new level of service excellence, moving beyond the traditional product distribution model to a far more sophisticated and value-driven approach through financial planning. Now Andre Parize will start our Q&A session. Okay, thank you, Maffra. We're going to start the Q&A with the first... Questions coming from Antonio Huet, Bank of America. Antonio, can you hear us?

Victor Mansur: I think it would be interesting to share three pillars we are focusing on for the years you come.

Maffra: Third and last.

Maffra: evolving our company's value proposition to a new level of service excellence, moving beyond the traditional product distribution model to a far more sophisticated and value-driven approach through financial planning.

Victor Mansur: And now let's go to the numbers. Total positive performance in capital markets reflected both in retail, especially fixed income, and corporate issue services. The institutional revenue was slightly lower, quite a little bit quieter. On the right hand side of this line we can see our grass revenue breakdown and the trend is still the same as last quarter when corporate issue services increase their participation on total grass revenues.

Andre Parize: Now, Andre Parize, we'll start our Q&A session. Okay, thank you, Maffra.

Maffra: Now Andre Parisi will start our Q&A session.

Andre Parize: Thank you, Maffra. We're going to start the Q&A session, and the first question comes from Antonio Huet, from Bank of America. Can you hear us, Antonio?

Andre Parize: We're going to start the Q&A, and the first questions coming from Tony Huwetch, Bank of America. Tony, can you hear us? Thank you, Maffra. We're going to start the Q&A session, and the first question comes from Antonio Huwetch, Bank of America. Can you hear us, Antonio? We're here, I think. We're going to start the Q&A session. Thank you. Thank you very much.

Andre Parisi: Okay, thank you Maffra. We're going to start the Q&A in the first...

Andre Parisi: Questions coming from Antonio Huet, Bank of America

Andre Parisi: Daniel, Daniel, Daniel, Daniel,

Victor Mansur: Let's move to the net slide if more details on retail. Retail revenue achieved in 3.3 billion, a 14% growth year over year, and a 5% growth quarter over quarter. Fixed income was the main highlight, if a 42% growth year over year, and a 17% growth quarter over quarter, which was driven by our capacity to develop new products, including corporate credit and structural notes through primate offerings, and our capacity to provide the liquid in the secondary market, considering our higher than 60% market share in most of the goods.

Andre Parisi: [inaudible]

Speaker Change: [inaudible]

Speaker Change: Antonio, can you hear us?

Victor Mansur: Moving on to the next slide, we will talk about corporate and industry services revenue. Corporate and industry services posted an outtime of high revenue, achieving 629 million in the quarter, which represents 122% growth year over year, and 24% growth quarter over quarter. Issued services continue to present a fast base of DCM activity, posting higher revenues than last quarter, and reaching 384 million, a 145% growth year over year, and a 37% growth quarter over quarter.

Speaker Change: [inaudible]

Speaker Change: Bruno Santos, Guilherme,

Speaker Change: [inaudible]

unknown: Thank you all very much for attending. Gabriel Valdo, Jim Fontaine,,,,,,,,,,,,,,,, OK, I believe we got back here in our Q&A session. The mat, Question, is to Jorge Kuri from Morgan Stanley. Edition.

Speaker Change: Oh crap, what the hell was this son of a bitch, son of a bitch, son of a bitch, son of a bitch

Victor Mansur: By having a consolidated investment banking business in solid credit issues, we can reach our corporate clients to in that sense, corporate presented the same trend of last quarter, if transactional revenues grown on the back of the derivatives and the facts. Corporate posted 204 5 million in the quarter, a 94% growth year over year, and a 7% growth quarter over quarter. On the right hand side of this slide, we're explaining a little later the cycle and referring tune, which connects both our retail, corporate, and investment banking business.

Speaker Change: [inaudible]

Speaker Change: And I, I, I, I,

Speaker Change: Dr. Prima, Dr. Prima,

Speaker Change: Thank you very much.

Speaker Change: [inaudible]

Victor Mansur: XP low on book is primarily focus on supporting our warehouse business, making sure it's paving the way to our retail distribution. In the squatter, we originated 10 billion new corporate securities warehouses in your balance sheet. In time, those securities will be sold to our retail clients, and this revenue will show as fixed income. Finally, by having the market making capabilities, we can also recycle this risk and provide a liquid to our different types of clients, maximizing the return of our balance.

Speaker Change: Thank you for having us, good morning.

Victor Mansur: Richard.

Victor Mansur: Moving on to the next slide, we will explore our SCGNA and Efficiency ratios. Across discipline and efficiency, I priority your business to keep Xp competitive. If that's in mind, we achieved the best efficiency ratio since the April, if 36.1%, to 120 base points better year-to-year and 40 base points better and quieter over-quarter. SCGNA X incentives reached 1.4 billion in the second quarter of 2024, a growth of 14% year-over-year and flatish quarter-over-quarter.

Victor Mansur: Bear in mind that, on the second quarter of 2023, we didn't have model SCGNA in your financials. The strict cost discipline, along with our innovation initiatives, we were always to keep expanding our EBT margin in direction of our guidance. EBT achieved the highest level in your industry, a combination of a rise in ecosystem revenues and the strict expense control reaching 1.4 billion. This represents a growth of 43% year-over-year and 27% quarter-over-quarter, driving our EBT margin to 32.8%, a 500 and 52 base points growth year-over-year and a 509 base points growth quarter-over-quarter. On a last 12 months basis, our EBT margin reached 28.1%. We expect to improve our EBT margin on an annual basis toward our guidance in 2022.

Andre Parize: You okay? I believe we got back here in our Q&A session. The next question is to Jorge Kuri from Morgan Stanley.

Speaker Change: Okay, I believe we got back here in our Q&A session.

Speaker Change: Next.

Speaker Change: Question?

Speaker Change: Jorge Kuri from Morgan Stanley

Victor Mansur: Let's see our net income on the next slide. We also achieved the highest net income in your history, 1.1 billion in the second quarter of 2024, growing 14% year-over-year and 9% quarter-over-quarter. Net margin posted 26.5% in the second quarter, a decrease of 103 base points year-over-year, and then increase of 100 and 10 base points quarter-over-quarter. As we mentioned in the investor day, we expect XB effective X-rate on a last 12 month basis to gradually increase over time due revenue mix.

Speaker Change: And I, I, I, I,

Speaker Change: [inaudible]

Speaker Change: Julien, Julien, Julien, Julien, Julien,

Speaker Change: and Thiago Maffra. And I'm going to be interviewing Thiago Maffra today. And I'm going to be interviewing Thiago Maffra today. So let's get started. So let's get started.

Speaker Change: Hello.

Speaker Change: [inaudible]

Andre Parize: Okay, we apologize. We are still fixing the Zoom connection; please hold for one, two more minutes. Thank you. Okay, I believe we were back.

Victor Mansur: Since Crossell and corporate SMB business keep evolving and present a higher tax rate, let's move on to the next slide to talk about capital management. As I already mentioned, an efficient capital management is key to achieve our long-term objectives. During the last two and a half years, we have distributed over 7.5 billion through dividends and share-by-backs. Those distributions are connected to our strategy returns part of the excess capital at XB in level to shareholders, while keeping a conservative basal index.

unknown: Okay. Hey, we apologize. We're still fixing the Zoom connection.

Speaker Change: We apologize, we are still fixing the Zoom connection.

unknown: Please hold for one, two more minutes. Thank you. Please hold for one, two more minutes. Thank you. Please hold for one, two more minutes. Thank you. Please hold for one, two more minutes.

Speaker Change: Please hold for one, two more minutes. Thank you.

Victor Mansur: As we mentioned in your investor day, we intend to reduce it across the years between 16 to 19%. Those initiatives together, if for a net income growth result, in a higher returns going forward, as we are going to see in the next slide. You can see the evolution of R&S per share of posting as solid growth and achieving 2.03 reais, a 10% year-over-year and a 90% quarter-over-quarter. During the second quarter of 2024, XB posted 27.2% in ROTE, if we increase off to 110 base points year-over-year and 108 base points quarter-over-quarter. We believe that ROTE presents a better comparison to peers in Brazil to be our gap on IFRS differences.

Speaker Change: [inaudible]

Thiago Maffra: Now, I turn over to Mafra for his final remarks. We have a solid quarter with revenue growth and operating leverage. This combination gives us confidence that we are on track to deliver our 2026 guidance. All initiatives from distribution channel diversification to Salesforce expansion are proving that we are in the right direction to deliver our higher level of net new money compared to last year. Finally, we believe that we are keeping and enhancing our modes by first offering the best product platform in the country ensuring that our customers have access to an unmatched range of solutions.

Speaker Change: Thank you very much for watching this video.

unknown: Thank you. Okay, I believe we're back. And the first question is for Antonio Huet from Bank of America. Antonio, you may proceed. Hi, good evening, guys. Can you hear me?

Speaker Change: Yeah.

Andre Parize: And the first question is for Antonio, who had from Bank of America. Antonio, you may proceed.

Speaker Change: Okay, I believe we're back, and the first question is for Antonio Huet from Bank of America. Antonio, you may proceed.

Antonio Guimares: Hi, good evening, guys. Can you hear me? Yes, we can. All right, all right.

Antonio Huet: Hi, good evening guys. Can you hear me?

Antonio Huet: Yes, we can. All right. All right. So there are two questions on my side. So first on netting flows, if you could please explore a little bit the consistency and the quality of these netting flows, so how do you break down in terms of across inflows and also outflows, uh, also in terms of mix, and is it coming from other players, is it new money? A deep dive on netting flows, and my second question, on headcount. We noticed that that headcount increased in the quarter This is Thiago.

Speaker Change: Yes, we can. All right, all right.

Antonio Guimares: So, two questions on my side. So, first of all, on net inflows, if you could please explore a little bit the consistency and the quality of this net inflows. So, how do you break down in terms of across inflows and also outflows also in terms of mix? And is it coming from other players? Is it new money? So did time here on net inflows?

Antonio Huet: So two questions on my side. So first on netting flows, if you could please explore a little bit the consistency and the quality of these netting flows. So how do you break down in terms of across inflows and also outflows, also in terms of mix and is it coming from other players, is it new money? So a deep dive here on netting flows. And my second question on headcount, we noticed that that headcount increased in the quarter and if you could explore a little bit here this theme, it would be great. Thank you.

Thiago Maffra: Second, empowering the largest and best-strained Salesforce in the industry. Third and last, evolving our company's value proposition to a new level of service excellence, moving beyond the traditional product distribution model to a far more sophisticated and valued driven approach through financial planning.

Antonio Guimares: And my second question on headcount: we noticed that the headcount increase in the quarter. And if you could explore a little bit here, this team, it would be great. Thank you.

Thiago Maffra: Hello, Antonio. This is Thiago. So, first of all, sorry to everyone that it's here on the call for the problems we have. So, we never open outflows and inflows. Okay, and not even where the money comes from. So what I can tell you, there is nothing not organically here. In the number. So, it's 100% organically. And, as we mentioned, it's more related to the levers that we have been working on in the past. Quarters that they are maturing and starting to bring more net new money. So, yes, we believe the worst is behind us. We are not going to give.

Thiago Maffra: So first of all, sorry to everyone that is here on the call for the problems we have. So, we never open outflows and inflows, okay, and not even where the money comes from. So what I can tell you, there is nothing not organically here in the number. So it's 100% organic.

Antonio Huet: Hello Antonio, this is Thiago. So first of all, sorry to everyone that is here on the call for the problems we have. So,

Andre Parize: Now, Andre Parize, we'll start our Q&A session. Okay, thank you, Maffra.

Thiago Maffra: And as we mentioned, it's more related to the levers that we have been working on in the past quarters, which are maturing and starting to bring more net new money. So yes, we believe the worst is behind us. We are not going to give short-term numbers for next quarter or the next quarters. But what I can say is we do not expect to go back to $13-12 billion in the last quarters. So that's basically what we believe.

Thiago Maffra: We never open outflows and inflows, okay, and not even where the money comes from. So, what I can tell you, there is nothing not organically here in the number. So, it's 100% organically. And as we mentioned, it's more related to the levers that we have been working on in the past.

Andre Parize: We're going to start the Q&A and the first questions coming from Tony Huwetch, Bank of America. Tony, can you hear us? Thank you, Maffra. We're going to start the Q&A session and the first question comes from Antonio Huwetch, Bank of America. Can you hear us, Antonio? We're here, I think. We're going to start the Q&A session. Thank you. Thank you very much.

Thiago Maffra: quarters that they are maturing and starting to bring more net new money. So, yes, we believe the worst is behind us. We are not going to give

Thiago Maffra: Short term numbers for for next quarter or the next quarters, but what I can say is we do not expect to go back to 13 12 billion as the last quarters.

Thiago Maffra: short-term numbers for for next quarter or the next quarters. But what I can say is we do not expect to go back to 13-12 billion as the last quarters.

Thiago Maffra: So that's that's basically what we leave, so we expect good levels of retail net new money going forward for headcounts. Basically, what we have been hiring people is especially. As we open last quarter, that we have almost 2000 internal advisors, so we have been, I would say, increasing the number around 80 100 per month. Okay, so internal advisors. So that explains a good part of the number here. Of course, we have some other like high rings. We had an internship program with 200 interns. So, that's the number.

Thiago Maffra: So we expect good levels of retail net new money going forward. For headcount, basically, what we have been hiring people for is, especially as we opened last quarter, we have almost 2000 internal advisors. So we have been, I would say, increasing the number around 80-100 per month, okay, so internal advisors. So that explains a good part of the number here. Of course, we have some others like hiring. We had an internship program with 200 interns.

Thiago Maffra: So, that's basically what we live. So, we expect good levels of retail net new money going forward.

Speaker Change: for Headcounts. Basically what we have been hiring people is especially as we opened last quarter that we have

Thiago Maffra: So that's the number. All right, thank you. Okay, the next question is from Jorge Kuri and Mauricio Sali. Jorge, you can, you may proceed. Hi, everyone.

Speaker Change: almost 2,000 internal advisors so we have been, I would say, increasing the number around 80, 100 per month, okay, so internal advisors.

Speaker Change: So that explains a good part of the number here. Of course, we have some other like hirings. We had an internship program with 200 interns. So that's the number.

Antonio Guimares: All right, thank you.

Speaker Change: All right, thank you.

Speaker Change: [inaudible]

Jorge Kuri: Okay, the next question is from Jorge. We more you say, how do you can you make to see? Hi everyone. Thanks. We continue to ask questions, and congrats on the numbers.

Speaker Change: [inaudible]

Speaker Change: Dr. Prima, Dr. Prima,

Speaker Change: Okay, the next question is from Jorge Curie in Morgantown. Jorge, you may proceed.

Jorge Kuri: Thanks for the opportunity to ask questions and congratulations on the numbers. I'm sorry to re-ask the previous question again, but I do think it's important, the on the inflows. I mean, I appreciate the explanation that Maffra gave about some of these competitive advantages that you have. And if you go back to that slide, where you show them next to the inflows, I mean, it feels to me that, you know, all of those things that we were in play a year ago and certainly a quarter ago, like, know, your multi-channel distribution, your product capabilities, your digital capabilities, your robust IFA network, I don't know that there is any material difference in the last three months on any of those items.

Jorge Curie: Hi, everyone. Thanks for the opportunity to ask questions and congrats on the numbers. Sorry to re-ask the previous question again, but I do think it's important.

Jorge Kuri: I'm sorry to re-ask the previous question again, but I do think it's important. The on the inflows, I mean, I appreciate the explanation that Maafra gave about some of these competitive advantage that you have and if you go back to that slide where you show them next to the inflows, I mean, it feels to me that, you know, all of those things, you know, were in play, you know, a year ago and certainly a quarter ago, like, you know, your multi-channel distribution, you're part of capabilities, you're digital capabilities, you're robust IFA network, I don't know that there is any material difference in the last three months on any of those items and it feels to me that, you know, maybe there is a signal component here on the recovery of net inflows and so to the extent that you can help us understand better you know, to what extent, indeed, there is something cyclical, maybe the volatility that happened in the quarter, I mean, the market sold off aggressively in June and then it picked up again, the current value.

Jorge Curie: on the inflows, I mean I appreciate the explanation that Maffra gave about some of these competitive advantages that you have and if you go back to that slide where you show them next to the inflows, I mean it feels to me that you know all of those things

Speaker Change: You know, we're in play.

Speaker Change: a year ago, and certainly a quarter ago.

Speaker Change: you know, your multi-channel distribution, your product capabilities, your digital capabilities, your robust IFA network. I don't know that

Speaker Change: if there is any material difference in the last three months.

Speaker Change: on any of those items and it feels to me that, you know, maybe there is a cyclical component here on the recovery of

Jorge Kuri: And it feels to me that, you know, maybe there is a cyclical component here in the recovery of net inflows. And so, to the extent that you can help us understand better, to what extent there is, something cyclical, maybe the volatility that happened in the quarter. I mean, the market sold off aggressively in June, and then it picked up again, the currency devalued. So any more color on this?

Speaker Change: net inflows. And so to the extent that you can help us understand better, you know, to what extent, indeed, there is.

Speaker Change: something cyclical, maybe the volatility that happened in the quarter. I mean, the market sold off aggressively in June and then it picked up again, the currency devalued. So, any more color on this?

Thiago Maffra: So any more color on these very notable and I think important increase in inflows would be helpful. Thank you. Yeah, yeah, for sure, Jorge. Most of these levers, they were in place, but they were not mature if we go back. Of course, they did mature from one month to the other or from one quarter to the other. They're maturing and of course we have some other levers that help us to increase the number. For example, if you compare today that we have 11.5 instead of interest rates, instead of 13.75, and you have reads being 1% a month, when you compare that like to the CDs from the banks, the changing regulation, all this stuff, of course it helps. But I would attribute more value like to everything that we have been doing, everything that we control, than a mockery environment, okay? So, and again, it's not something that it's specifically to just quarter, okay? That so then in Q3 we are going back like to 13, 12 from Q4 and Q1, it's more like a normal level. Of course, there are volatilage can be slightly lower, slightly higher in the next quarter, but there's nothing not organically here, okay? So we expect that the worst is behind us, that we are going to deliver good retail and that new money in the next quarters.

Jorge Kuri: Very notable, and I think an important increase in inflows would be helpful. Thank you. Yeah, yeah, for sure, Jorge. Most of these levers were in place, but they were not mature.

Speaker Change: Very notable and I think important increase in inflows would be helpful. Thank you.

Speaker Change: Yeah, yeah, for sure Jorge. Most of these...

Thiago Maffra: If we go back, of course, they didn't mature from one month to the next or from one quarter to the next; they're maturing. And, of course, we have some other levers that help us to increase the number. For example, if you compare today that we have 11 and a half instead of 13.75 interest rates, and you have REITs paying 1% a month, when you compare that to the banks, the changing regulation, all this stuff, of course, it helps.

Speaker Change: levers they were in place but they were

Speaker Change: Of course, they didn't mature from one month to the other, or from one quarter to the other. They're maturing, and of course, we have some other...

Speaker Change: Amen.

Speaker Change: levers that help us

Speaker Change: to increase the number, for example, if you compare today that we have 11.5 instead of interest rates, instead of 13.75.

Andre Parize: you Okay, I believe we got back here in our Q&A session, the next question is to Jorge Kuri from Morgan Stanley.

Speaker Change: and you have REITs paying 1% a month when you compare that like to the CGs from the banks, the changing regulation, all this stuff, of course it helps, but I would...

Thiago Maffra: But I would attribute more value, like to everything that we have been doing, everything that we control, then a macro environment. Okay, so and again, it's not something that it's specifically to this quarter. Okay, that so then in Q3, we are going back to 1312 from Q4 and Q1. It's more like a normal level, of course; there are bullet sheets that can be slightly lower, slightly higher in the next quarters. But there is nothing not organically here.

Speaker Change: attribute more value like to everything that we have been doing everything that we control than a macro environment okay so and again it's not something that it's

Speaker Change: specifically to this quarter, okay, so then in Q3 we are going back like to 13, 12 from Q4 and Q1. It's more like a normal level, of course there are volatilities which can be slightly lower, slightly higher in the next quarters.

Speaker Change: but there is nothing not organically here, okay? So we expect that the worst is behind us, that we are going to deliver good retail, not new money in the next quarters.

Thiago Maffra: Okay, so we expect that the worst is behind us, that we are going to deliver good retail, not new money, in the next part. All right, great. Thank you, Maffra.

Thiago Maffra: All right, great, thank you, Mufra.

Speaker Change: All right, great. Thank you, Maffra.

Andre Parize: Okay, we apologize, we are still fixing the zoom connection, please hold for one, two more minutes. Thank you.

Speaker Change: [inaudible]

Henato Meloni: Okay, the next question comes from Henato Meloni from Antónimos: how do you make the CD?

Renato Meloni: Okay, the next question comes from Renato Meloni from Autonomous. Renato, you may proceed. Hi everyone, can you guys hear me?

Speaker Change: [inaudible]

Speaker Change: Okay, next question comes from Renato Meloni from Autonomous. Renato, you may proceed.

Henato Meloni: Hi, everyone. Can you guys hear me? Yes, we can. Thanks for this space here for questions and welcome Victor here for school here with the team. So just like following up on that new money on the last call, you said that you would take some time to return to normalize levels of net new money similar to the previous year. And in fact, the numbers were to be much better than any quarter, at least organically. Last year, so I wonder here what change from your deal from the best barter. And what's the, the, I would say, sustainable level of net new money for some quarters.

Renato Meloni: Hi everyone, can you guys hear me?

Victor Mansur: Yes, we can. Thanks for this space here for questions, and welcome, Victor, to your first call here with the team. So following up on Net New Money, on the last call, you said, Maffra, that it would take some time to return to normalized levels of Net New Money, similar to the previous year. And in fact, the numbers today were much better than any quarter, at least organically, last year. So I'm wondering here what changed from your view from the past quarter and what is the, I would say, sustainable level of Net New Money for the coming quarters?

Speaker Change: Yes, we can.

Speaker Change: Thanks for this space here for questions and welcome Victor to your first call here with the team.

Renato Meloni: Following up on net new money, on the last call you said, Maffra, that it would take some time to return to normalized levels of net new money, similar to the previous year. And in fact, the numbers were today much better than any quarter, at least organically, last year. Can we hear what changed from your deal, from the past quarter?

Speaker Change: and what's the, I would say, sustainable level of net new money for the coming quarters. And just a second quick question, what drove the increase in the effective tax rates that was much higher this quarter? Thank you.

Henato Meloni: And just a second quick question, what drove the greens and the effective tax rate that was much higher this part. Thank you.

Victor Mansur: And just a second, a quick question, what drove the increase in the effective tax rates that were much higher this quarter? Thank you. Okay, I can take the first part and then Victor will take the HR question. So, again, the normal level was not the 13 and 12 billion from Q3, from Q4 and Q1. That was not normal.

Thiago Maffra: OK, I can take the first part and then to take each our question. So again, the normal level was not the 1312 billion from Q3, from Q4, and Q1. That was not normal. OK, so.

Speaker Change: Okay, I can take the first part and then you can take each of our questions.

Speaker Change: Again,

Speaker Change: The normal level was not the 13 and 12 billion from Q3, from Q4 and Q1.

Thiago Maffra: Okay, so, and when I say that going back to normalizing the levels is more like true, what we have been doing in 2021, early 2022, we are doing like 30 billion, okay, per quarter. That's what I said that it may take some time to go back there. But, again, the levels that we are delivering right now can be a little more, a little less, 20, 20 plus against 13. That's more a normalized level for the moment.

Thiago Maffra: And when I say that going back to normalize levels is more like true, what we have been doing 2021, 20, early 2022 that we are doing like 30 billion, OK, per quarter. That's what I said that we, it may take some time to go back there. But again, the levels that we are delivering right now more can be a little more, little less 20, 20 plus against 13. That's more a normalize level for the moment. But again, we are working very hard, like to at some point in time in the next years to go back to 3040 because we believe that our mood or compared to advantage is huge in place.

Speaker Change: That was not normal.

Speaker Change: okay so and when I say that going back to normalizable levels is more like true what we have been doing in 2021, early 2022 that we are doing like 30 billion okay per quarter.

Antonio Guimares: Okay, I believe we were back. And the first question is for Antonio, who had from Bank of America. Antonio, you may proceed. Hi, good evening, guys. Can you hear me? Yes, we can. All right, all right.

Antonio Guimares: So, two questions on my side. So, first of all, on net inflows, if you could please explore a little bit, the consistency and the quality of this net inflows. So, how do you break down in terms of across inflows and also outflows also in terms of mix? And is it coming from other players? Is it new money? So did time here on net inflows?

Speaker Change: That's what I said that we it may take some time to go back there But again the levels that we are delivering right now more can be a little more a little less

Speaker Change: 20, 20 plus

Thiago Maffra: But, again, we are working very hard to go back to 30, 40, because we believe that our mode, our competitive advantage is still in place. That's what we have been talking to all the investors about for the past, I would say, almost a year. The question is, and has always been, okay, now the banks or the competitors have closed the gaps, and you guys have lost the competitive advantage.

Speaker Change: against their team. That's more a normalized level for the moment, but again, we are working very hard to, at some point in time, in the next years, to go back to 30-40, because we believe that our mode, our competitive advantage,

Thiago Maffra: That's what we have been talking to all the investors in the past would say almost a year. The question is, has been always, OK, now the banks or the competitors, they have close the gaps. You guys have lost the competitive advantage, and we always said no. It's something that's temporary at some point with everything that we are doing. We revert that. I believe that's the beginning. OK, so of just new levels.

Speaker Change: is still in place. That's what we have been talking to all the investors in the past, I would say, almost a year. The question has been always, okay, now the banks or the competitors, they have closed the gaps. You guys have lost the competitive advantage. And we always said, no, it's...

Thiago Maffra: And we always said, no, it's something that's temporary. At some point, with everything that we are doing, we will reverse that. I believe that's just the beginning. Okay, so, of these new levels, of course, we're not happy with 2020, for that we deliver right now. We are working very hard to go back to higher levels, but it may take some time. Okay, thank you. Sorry, Renato. What were you saying? Nature, you know; I got it.

Speaker Change: something that's temporary at some point with everything that we are doing we revert that I believe that's the beginning okay so of this new levels of course we are not happy with the 2020

Antonio Guimares: And my second question on headcount, we noticed that that headcount increase in the quarter. And if you could explore a little bit here this team, it would be great. Thank you.

Thiago Maffra: Of course, we are not happy with the 2024 that we deliver right now. You're working very hard like to go back to higher levels, but it may take some time.

Thiago Maffra: Hello, Antonio, this is Thiago. So, first of all, sorry to everyone that it's here on the call for the problems we have. So, we never open outflows and inflows. Okay, and not even where the money comes from. So what I can tell you, there is nothing not organically here. In the number. So, it's 100% organically. And as we mentioned, it's more related to the levers that we have been working on in the past.

Speaker Change: for that we deliver right now. We are working very hard to go back to higher levels, but it may take some time.

Thiago Maffra: OK, thank you.

Speaker Change: Okay, thank you.

Thiago Maffra: You know, I got it, but just so just to stay on that point, I think part of the question is like what changed from your deal in the previous quarter or maybe nothing changed. Yeah, nothing changed. All the work we have been doing in the past quarters. OK, thank you.

Renato Meloni: But just so just to stay on that point, I think part of the question is like, what changed from your view in the previous quarter? Or maybe nothing changed? Yeah, nothing changed. All the work we have been doing in the past quarter. OK, thank you, Renato. And thank you, Paul. It's a pleasure to be with you all for the first time.

Speaker Change: Sorry Renato, you were saying? You know, I got it, but just to stay on that point, I think part of the question is like what changed from your view in the previous quarter, or maybe nothing changed?

Renato Meloni: Yeah, nothing changed. All the work we have been doing in the past quarters.

Thiago Maffra: Quarters that they are maturing and starting to to bring more net new money. So, yes, we believe the worst is behind us. We are not going to give. Short term numbers for for next quarter or the next quarters, but what I can say is we do not expect to go back to 13 12 billion as the last quarters. So that's that's basically what we leave so we expect good levels of retail net new money going forward for headcounts basically what we have been hiring people is especially.

Victor Mansur: Thank you for the pleasure to be here for all for the first time and moving to the chair question. Basically, they share is a result of revenue mix as we come into before the corporation services was one of their highlights of the quarter and they are higher higher tax business as they are in the bank. And what I can say about that, we expect that the tax rate of this quarter to be the highest quarterly rate of this year.

Speaker Change: Thank you, Renato, and thank you all. It's a pleasure to be with you all for the first time.

Victor Mansur: And moving to the HR question. Basically, the HR issue is a result of the revenue mix. As we commented before, the corporate services was one of the highlights of the quarter.

Speaker Change: And moving to the HR question, basically the HR is a result of revenue mix. As we commented before, the corporation services was one of the highlights of the quarter. And they are higher tax business as they are in the bank.

Victor Mansur: And they are higher-tax businesses as they are in the bank. And what I can say about that, we expect the tax rate of this quarter to be the highest quarterly rate of this year. But I recommend that you look at the last 12 months' normalized HR. That is a better method because it considers the tax paid in the proprietary funds and removes the impact of the quarterly revenue mix variation.

Speaker Change: And what I can say about that, we expect that the tax rate of this quarter to be the highest quarterly rate of this year.

Victor Mansur: But I recommend that you look at the last 12 months, normalize the chair. There is a better matter because it's considered the tax paid, the repeat our funds and moves the impact of the criteria revenue mix variation. And this number was in 18.5 from this quarter, and we can expect this number should be around that over the year. That's very clear.

Speaker Change: But I recommend that you look at the last 12 months normalized ETR, that is a better method because it's considered the tax paid in the proprietary funds and moves the impact of the quarterly revenue mix variation.

Thiago Maffra: As we open last quarter that we have almost 2000 internal advisors, so we have been I would say increasing the number around 80 100 per month. Okay, so internal advisors. So that explains a good part of the number here. Of course, we have some other like high rings, we had internship program with 200 interns. So, that's the number.

Victor Mansur: And this number was 18.5 for this quarter. And we can expect this number should be around that for the year. That's very clear. Thank you. Okay, next question is from Daniel Vaz, Banco Sá. Daniel, you may proceed. Hi guys. Hi Maffra.

Speaker Change: and this number was in 18.5 from this quarter and we can expect this number should be around that over the year.

Antonio Guimares: All right, thank you.

Victor Mansur: Thank you.

Speaker Change: That's very clear. Thank you.

Daniel Vaz: Okay, next question is from Daniel Vaz, Buntos Sartre, Danieli, Guilherme Prasim.

Speaker Change: This is a production of the Center for Contemporary Art in the United States. No part of this recording may be reproduced without the support of the Center for Contemporary Art.

Speaker Change: Okay, next question is from Daniel Vaz, Banco Sá. Daniel, you may proceed.

Daniel Vaz: Hi, guys. Hi, Maffra. Hi, everyone. So, yeah, your distribution capabilities are indeed very strong. So you have this competitive advantage. So with strong this year, you should say, this quarter probably, it was a key driver, right? So I think nothing has changed, right? So, organically, you're still very, very capable of raising this new money organically. So I wanted to understand here, this robust numbers in distribution, how this have helped the, the neck new money in this quarter. So is the growth more concentrated in banks from the instruments or this Texas and private private credit. So just a bit to qualify.

Daniel Vaz: Hi, everyone. So, yeah, your distribution capabilities are indeed very strong. So you have these competitive advantages. So with strong DCM issuances this quarter, probably it was a key driver, right? So I think nothing has changed, right? So organically, you're still very, very capable of raising this new money organically.

Daniel Vaz: Hi, hi guys, hi Maffra, hi everyone. So, um...

Speaker Change: Yeah, your distribution capabilities are indeed very strong, so you have these competitive advantages. So, with strong DCM issues this quarter, probably it was a key driver, right? So, I think nothing has changed, right? So, organically, you're still very capable of...

Jorge Kuri: Okay, the next question is from Jorge, we more you say, how do you can you make to see?

Jorge Kuri: Hi everyone. Thanks. We continue to ask questions and congrats on the numbers. I'm sorry to re ask the previous question again, but I do think it's important. The, on the inflows, I mean, I appreciate the explanation that Maffra gave about some of these competitive advantage that you have and if you go back to that slide where you showed them next to the inflows, I mean, it feels to me that, you know, all of those things, you know, where in play, you know, a year ago, and certainly a quarter ago, like, you know, your multi-channel distribution,[inaudible] to what extent, to what extent, Yes, we can.

Speaker Change: raising this new money organically. So I wanted to understand here,

Daniel Vaz: So I wanted to understand here, these robust numbers in distribution, how these have helped the net new money in this quarter. So is the growth more concentrated in bank funding instruments or taxes and private credit? So just a bit to qualify the distribution and the net new money, if you can. And the second question about corporate, if you can give us a little bit more context on that, because it was very strong, and this is not as mature, right? So, it would be good to hear from you. Thank you. Hi Daniel.

Speaker Change: These robust numbers in distribution, how these have helped the net new money in this quarter? So is the growth more concentrated in bank from the instruments or this Texas and private private credit? So

Daniel Vaz: The distribution and the neck new money, if you can.

Speaker Change: Just a bit to qualify the distribution and the net new money, if you can. And the second question about corporate, if you can give us a little bit more context on that, because it was very strong and this is not as mature, right? So, it would be good to hear from you. Thank you.

Victor Mansur: And the second question about corporate, if you can give us a little bit more context on that, because it was very strong and this is not as mature, right? So it would be good to hear from you.

Victor Mansur: Thank you.

Victor Mansur: Hi, Daniel. Thank you for a question. And as we come in the retail, the fixed income was the main right light in the retail business. And basically, it's, we have a close relation, if they retail fixed income and the DCM activity. And as you can see, your balance sheet originates a lot of new, new fixed income instruments over the quarter. And of course, this helps us to generate fixed income revenues, and this helps a lot if the net new, if the net new money. And I don't know if that answered our question.

Victor Mansur: Thank you for your question. And as we come to retail, fixed income was the main bright light in the retail business. And basically, we have a close relation between retail fixed income and DCM activity. And as you can see, in your balance sheet, a lot of new, new fixed income instruments originated during the quarter. And, of course, this helps us to generate fixed income revenues, and this helps a lot if they're not new, if they're not new money. And I don't know if that answers your question. If it does, we can move to the next point. What, what, what?

Speaker Change: Hi Daniel, thank you for our question. And as we come in the retail, the fixed income was the main highlight in the retail business.

Speaker Change: and basically it's, we have a close relation if the retail fixed income and the DCM activity.

Speaker Change: And as you can see in your balance sheet, originates a lot of new.

Speaker Change: new fixed income instruments over the quarter. And of course this help us to generate fixed income revenues. And this helps a lot if the net new money.

Victor Mansur: If it does, we can move to the next point.

Speaker Change: And I don't know if that answers your question. If it does, we can move to the next point.

Thiago Maffra: What, what, what, just when, when, when we said, if you get moved back to my, my slide about the money, the first point was the product platform, okay. Victor just mentioned the integration between GCM and retail distribution. Okay. But we go beyond that. Okay.

Thiago Maffra: Just a comment here. When we said, if you go back to my slide about Nanyomani, the first point was the product platform, okay? Victor just mentioned the integration between GCM and retail distribution, okay? But we go beyond that, okay?

Speaker Change: what what

Speaker Change: Sorry. Just a moment.

Speaker Change: When we said, if you go back to my slide about the New Mining, the first point was

Speaker Change: the product platform, okay? Victor just mentioned the integration between GCM and retail distribution, okay? But we go beyond that, okay? So if we get the site that's public, so if you get all the REITs,

Thiago Maffra: So if we get the site that's public, so if you get all the REITs offerings that we did this year, we have been able to raise in a single offer almost two billion reais, okay? So what we saw in the first quarter and also in the second one is the appetite for, I would say, more diversified products when compared to last year when people were only looking for CGs, tax exempt CGs from the banks. Okay. Okay, regarding the corporate side, any comments here, please?

Thiago Maffra: So if we get the site that's public. So if you get all the reads offering that we did this year, we have been able to raise in a single offer almost to be the right. Okay. So what they saw in the first quarter and also the second one is the appetite for. I would say more diversified products, when compare like to last year that people are only looking for CG stacks exempt CDs from the banks, okay.

Speaker Change: that we did this year, we have been able to raise in a single offer almost 2 billion reais. OK, so what we saw in the first quarter and also in the second one is the appetite for, I would say, more diversified.

Speaker Change: products when

Speaker Change: compare like to last year that people are only looking for CGs, tax exempt CGs from the banks, okay?

Speaker Change: [inaudible]

Thiago Maffra: Okay, regarding the corporate size, any comments here, please. I think the corporate size reflects on what I told you about the using of new products to offer sure or corporate partners in the clients. And basically, if you look at the rent, we didn't have the ability to get two years ago. We also didn't have this business two, two, three years ago. And basically, as we grow those products in your platform and user relationship, we are capable to do more cross-sell for those clients. Right have the client and the right have the product. So those business lines should be growing at the pace of our guidance.

Speaker Change: Okay, regarding the corporate side, any comments here please?

Victor Mansur: I think a couple of slides reflect what Maffra said about the building of new products to offer to our corporate and SMB clients. And basically, if you look at the rankings, we didn't have any derivatives capabilities two years ago, and if you look at our FX ranking, we also didn't have this business two to three years ago. And basically, as we grow those products on our platform and user relationship, we are capable of doing more cross-selling for those clients, where I have the client, and the rest have the product. So those business lines should be growing on the basis of our guidance. So the next question is from Tito Labarta from Goldman Sachs. Tito, you may proceed. Hi, good evening, everyone.

Speaker Change: I think the copper sides reflect off water.

Speaker Change: it goes on and off.

Speaker Change: [inaudible]

Speaker Change: and giving up new products to offer to our corporate and SMB clients.

Speaker Change: [inaudible]

Jorge Kuri: Thanks for this space here for questions and welcome Victor here for school here with the team. So just like following up on that new money on the last call, you said that you would take some time to return to normalize levels of net new money similar to the previous year. And in fact, the numbers were to be much better than any quarter, at least organically. Last year, so I wonder here what change from your deal from the best barter.

Speaker Change: www.cdc.gov.au

Thiago Batista: So the next question is from Thiago Batista. I'm going to the sax, Tito; you may proceed. Hi, good evening everyone. Thank you for the call and taking my question. Another question on the inflows for more, how do you think that can benefit revenues going forward? We did see a bit of a pick up in retail revenues this quarter, or five percent, but in the past you said your revenues are not that correlated. So just how do you think, you know, a nice pick up in inflows, can this translate to in a further acceleration in revenues growing forward?

Speaker Change: So the next question is from Tito Labarta from Goldman Sachs. Tito, you may proceed.

Tito Labarta: Thank you for the call and taking my question. Another question on the inflows for more. How does how do you think that can benefit revenues going forward? We did see a bit of a pickup in retail revenues this quarter, five percent.

Tito Labarta: Hi, good evening everyone. Thank you for the call and taking my question. Another question on the inflows. How do you think that can benefit revenues going forward? We did see a bit of a pickup in retail revenues this quarter, 5%.

Tito Labarta: But in the past, you said your revenues are not that correlated to inflows. Which is why you think, you know, a nice pickup in inflows. Can this translate to a further acceleration in revenues growing forward? Just see how you think about that.

Jorge Kuri: And what's the, the, I would say, sustainable level of net new money for some quarters. And just a second quick question, what drove the greens and the effective tax rate that was much higher this part. Thank you.

Speaker Change: In the past, you said your revenues are not that correlated to inflows. How do you think, you know, and I pick up in inflows.

Speaker Change: Can this translate to a further acceleration in revenues growing forward? Just see how you think about that. And then just another question on your EBT margin, right, I mean, you know, big improvement there.

Thiago Batista: Just see how you think about that.

Victor Mansur: And then just another question on your EBT margin, right? I mean, you know, big improvement there. You know, how do you think about the sustainability of that margin, anything that was maybe one off that that's the big improvement in the quarter? How do you see it going forward? Thank you.

Tito Labarta: And then just another question on your EBT margin. Right. I mean, you know, big improvement there.

Thiago Maffra: OK, I can take the first part and then to take the each our question. So again, the normal level was not the 1312 billion from Q3 from Q4 and Q1. That was not normal. OK, so. And when I say that going back to normalize levels is more like true, what we have been doing 2021, 20, early 2022 that we are doing like 30 billion, OK, per quarter, that's what I said that we, it may take some time to go back there.

Tito Labarta: You know, how do you think about the sustainability of that margin? Anything that was maybe a one-off that led to the big improvement in the quarter? How do you see it going forward? Thank you.

Speaker Change: How do you think about the sustainability of that margin? Anything that was maybe one-off that led to the big improvement in the quarter? How do you see it going forward? Thank you.

Victor Mansur: Okay, thank you for your question.

Victor Mansur: OK. Thank you, Chito, for your question. I will take the first one, and Victor will take the second one.

Victor Mansur: I will take the first one, and you through the second one. So about the revenue and correlation with net new money. Of course, there is a small pick up, okay, because imagine that we have inflows and outflows, okay. But it is small when you compare like to the whole way you see that we have. So today we have almost 1.1 trillion reais of retail clients, okay, and the whole portfolio that we have is much larger than any net new money. So we don't see a big correlation in both of them, but yes, what why net new money is so important because that proves that we the mode of the company and the growth, the future growth.

Speaker Change: OK.

Speaker Change: Thank you, Tito, for your question. I will take the first one and you take the second one. So about the revenue and correlation with net new money. Of course, there is a small pickup. OK, because imagine that we have inflows and outflows.

Thiago Maffra: But again, the levels that we are delivering right now more can be a little more little less 20, 20 plus against 13. That's more a normalize level for the moment. But again, we are working very hard like to at some point in time in the next years to go back to 3040 because we believe that our mood or compared to advantage is huge in place. That's what we have been talking to all the investors in the past would say almost a year.

Speaker Change: Okay, but it's it is more when you compare like to the whole way you see that we have So today we have almost 1.1 trillion reais of retail clients. Okay, and the the

Speaker Change: portfolio that we have is much larger than any net new money. So we don't see a big correlation in both of them. But yes, what

Thiago Maffra: The question is has been always, OK, now the banks or the competitors, they have close the gaps. You guys have lose the competitive advantage and we always said no. It's something that's temporary at some point with everything that we are doing. We revert that. I believe that's the beginning. OK, so of just new levels. Of course, we are not happy with the 2024 that we deliver right now. You're working very hard like to go back to higher levels, but it may take some time.

Speaker Change: Why Net New Money is so important? Because that proves that the mode of the company and the growth, the future growth

Thiago Maffra: It's here. So that that's why net new money for us is the main KPR because that detects how it's going to be the company a few years down the road, okay, more than the revenue just quarter or next quarter.

Speaker Change: It's here, so that's why that new money for us is the main KPR, because that dictates how it's going to be the company a few years down the road, more than the revenue this quarter or next quarter.

Victor Mansur: Thank you for the question. I think the EBT margin rational is the same of DTR. You should look at the last 12 months' margin that is currently at 28. Looking at that margin, you should see a slight improvement toward our guidance levels over time. And that will eliminate some any variance quarter over quarter, how to do business mix or HR. Okay, no, that's helpful. Thank you.

Speaker Change: [inaudible]

Speaker Change: Hi, Tito. Thank you for the question. I think the EBT margin rational is the same of DTR. You should look at the last 12 months margin that is currently at 28.

Thiago Maffra: OK, thank you. You know, I got it, but just so just to stay on that point, I think part of the question is like what what changed from your deal in the previous quarter or maybe nothing changed. Yeah, nothing changed. All the work we have been doing in the past quarters. OK, thank you.

Speaker Change: Looking at the margin, you should see a slight improvement toward our guidance levels over time.

Thiago Maffra: So about the revenue and correlation with net new money. Of course, there is a small pickup, okay? Because imagine that we have inflows and outflows. Okay. But it's, it is more when you compare it to the whole way you see that we have. So today we have almost 1.1 trillion reais of retail clients, okay? And the whole portfolio that we have is much larger than any net new money. So we don't see a big correlation between in both of them.

Thiago Maffra: But yes, why is Net New Money so important? Because that proves that we, the mode of the company and the growth, the future growth, it's here. So that's why Net New Money, for us, is the main KPR, because that dictates how the company is going to be a few years down the road, okay? More than revenue this quarter or next quarter. Hi Tito.

Thiago Batista: And just maybe just in terms of the on the revenue outlook, are you feeling more comfortable with the revenue outlook from here. Any, you know, just potential catalyst to sort of accelerate the revenues, just thinking of where we are in the cycle. Yeah, not sure things for this question. The revenue for retail revenue.

Speaker Change: Okay, that's helpful. Thank you. And just maybe just in terms of the on the revenue outlook, are you feeling more comfortable with the revenue outlook from here? Any, you know, just potential catalysts to sort of accelerate the revenues?

Thiago Maffra: Thank you for the question. I think the EBT margin rationale is the same as DTR. You should look at the last 12 months' margin, which is currently at 28. Looking at that margin, you should see a slight improvement toward our guidance levels over time. And that will eliminate any variance quarter over quarter on how to do business mix or ETR. Okay, no, that's helpful.

Tito Labarta: Thank you. And maybe just in terms of the revenue outlook, are you feeling more comfortable with the revenue outlook from here? Any, you know, just potential catalyst to sort of accelerate the revenues? Just thinking of where we are in the cycle?

Tito Labarta: Yeah, not sure if it's for your question. The revenue, on retail, rather here. Can you repeat the question? Sure. Yeah, sorry.

Speaker Change: Just thinking of where we are in the FACO in the arrangements behind.

Speaker Change: Yeah, I'm not sure if I understood your question, your revenue report.

Thiago Maffra: Can we repeat the question. Sure, yes, sorry, just on the outlook for retail revenues, right? I mean, there was a pick up this quarter. I mean, do you think that that outlook is maybe improving to some extent? Yes, we still have high rates. How do you see? Yeah, yeah. As we mentioned in the presentation, we expect the second half of the year to be better than the first half of the year. Okay, so again, we are not giving guidance for the next quarter or for the year, but you can have in mind that the second half should be better in terms of revenues, net income, and so on, because again, the guidance for 2026.

Speaker Change: On retail rather here.

Tito Labarta: Just on the outlook for retail revenues, right? I mean, there was a pickup this quarter. Do you think that the outlook is maybe improving to some extent? You know, we still have high rates. How do you see it, you know?

Speaker Change: Can you repeat the question?

Speaker Change: Sure, yeah, sorry. Just on the outlook for retail revenues, right? I mean, there was the pickup this quarter. I mean, do you think that the outlook is maybe improving to some extent? You know, we still have high rates. How do you see, you know, Yeah, oh, I got it. Yeah.

Victor Mansur: But I recommend that you look at the last 12 months normalize the chair. There is a better matter because it's considered the tax paid the repeat our funds and moves the impact of the criteria revenue mix variation. And this number was in 18.5 from this quarter and we can expect this number should be around that over the year. That's very clear. Thank you.

Thiago Maffra: Yeah. Yeah. As we mentioned in the presentation, we expect the second half of the year to be better than the first half of the year. OK, so again, we are not giving guidance for the next quarter or for the year, but you can keep in mind that the second half should be better in terms of revenues, net income, and so on. Because, again, the guidance for 2026 is still in place. Nothing has changed.

Speaker Change: Yeah.

Speaker Change: As we mentioned in the presentation, we expect the second half of the year to be better than the first half of the year. OK, so again, we are not giving guidance for the next quarter or for the year, but you can.

Daniel Vaz: Okay, next question is from Daniel Vaz, Buntos Sartre, Danieli, Guilherme Prasim. Hi, guys. Hi, Maffra. Hi, everyone. So, yeah, your, your distribution capabilities are indeed very strong. So you have this competitive advantageous. So with strong this year, you should say, this quarter probably, it was a key driver, right? So I think nothing has changed, right? So organically, you're still very, very capable of raising this new money organically. So I wanted to understand here, this robust numbers in distribution, how this have helped the, the neck new money in this quarter.

Speaker Change: have in mind that the second half should be better in terms of revenues, net income, and so on. Because again,

Thiago Maffra: It's true in place; nothing change. And if you look the numbers, the Cagers, we have to deliver on revenue for the top of the guidance is 90%; the increasing marginy BG going to the range 30 to 34. We should start like to pick up in all just metrics, so they're wise we'll not go there. Okay, but we just mentioned that we are on track. So you can expect the like all just numbers to improve in the next quarter or. Of course, there are both achieved. We can go down in some of the quarters until the end of 2026, but the trend is upwards.

Speaker Change: the guidance for 2026.

Speaker Change: is still in place, nothing changed. And if you look at the numbers, the CAGRs we have to deliver on revenue for the top of the guidance is 19 percent. The increasing margin EBT going to the range 30 to 34, we should start to pick up in all these metrics, otherwise we would not go there.

Thiago Maffra: And if you look at the numbers, the CAGRs we have to deliver on revenue for the top of the guidance is 19 percent. The increasing margin EBT going to the range 30 to 34; we should start to pick up in all these metrics. Otherwise, we will not go there.

Thiago Maffra: OK, but we just mentioned that we are on track, so you can expect all these numbers to improve in the next quarters. Of course, there will be volatility; we could go down in some of the quarters until the end of 2026, but the trend is upwards. Okay, so you can expect the second half of the year to be better than the first one. Perfect. Thank you very much and congratulations on the sale. OK, the next question is from Olavo Artuso from UBS. Olavo, you may proceed.

Speaker Change: We just mentioned that we are on track, so you can expect all these numbers to...

Speaker Change: improve in the next quarters. Of course, there are volatilities. We can go down in some of the quarters until the end of 2026, but the trend is upwards, okay? So you can expect the second half of the year to be better than the first one.

Daniel Vaz: So is the growth more concentrated in banks from the instruments or this Texas and private private credit. So just a bit to qualify. The distribution and the neck new money, if you can. And the second question about corporate, if you can give us a little bit more context on that, because it was very strong and this is not as mature, right? So it would be good to hear from you.

Thiago Maffra: Okay, so you can expect the second half of the year to be better than the first one.

Thiago Maffra: Perfect, thank you very much, and congratulations on the result.

Speaker Change: All right, perfect. Thank you very much and congratulations on the results.

Unknown Executive: Okay, the next question is from a lot of those from UBS level. You may proceed. Thank you, guys. Thank you for taking my question. I have to, but my first is just a follow up on my colleague's question on that new money, and I totally understand this planation for this performance is quarter. It was related to the leverage you have been working off, but questioning all the other way, I understand that the change in taxes that instrument has had some effects, even I small one and also this decrease in the policy rate has some effect as well.

Speaker Change: Bruno Santos, Thiago Maffra, Thiago Maffra, Bruno Santos, Thiago Maffra, Bruno Santos.

Speaker Change: Okay, the next question is from Olavo Artuso from UBS. Olavo, you may proceed.

Olavo Artuso: Thank you, guys. Thank you for taking my question. I have two, but the first is just a follow-up to my colleague's question on net new money, and I totally understand the explanation for this performance this quarter. It was related to the leverage you have been working on, but questioning it from another angle, I understand that the change in taxes that the instruments have had some effect, even a small one, and also this move to decrease the policy rate has had some effect as well.

Daniel Vaz: Thank you. Hi, Daniel. Thank you for a question. And as we come in the retail, the fixed income was the main right light in the retail business. And basically, it's, we have a close relation, if they retail fixed income and the DCM activity. And as you can see, your balance sheet originate a lot of new, new fixed income instruments over the quarter. And of course, this help us to generate fixed income revenues and this helps a lot if the net new, if the net new money.

Olavo Artuso: Thank you, guys. Thank you for taking my question. I have two, but my first is just a follow-up of my colleague's question on that new money.

Speaker Change: And I totally understand the explanation for this performance this quarter. It was related to the leverage you have been working on.

Speaker Change: But questioning on the other way, I understand.

Speaker Change: The change in taxes of instruments has had some effects.

Speaker Change: even a small one.

Speaker Change: and also this decrease in the policy rate had some effect as well.

Daniel Vaz: And I don't know if that answered our question. If it does, we can move to the next point. What, what, what, just when when when we said, if you get moved back to my, my slide about the money, the first point was the product platform, okay. Victor just mentioned the integration between GCM and retail distribution. Okay. But we go beyond that. Okay. So if we get the site that's public. So if you get all the reads offering that we did this year, we have been able to raise in a single offer almost to be the right.

Olavo Artuso: So, could you just please give us a magnitude of these two impacts over the flow this quarter? Basically, just a magnitude, like if those two effects had less than 10% effect over the net new money, that would be helpful.

Unknown Executive: So could you just please give us a magnitude of this to impact over the flow, this quarter, just a magnitude like if those two effects had less than 10% effect over the net new money, that would be helpful.

Speaker Change: So, could you just please give us a magnitude of these two impacts over the flow described?

Speaker Change: Basically, just the magnitude, like, if those two effects had less than 10% effect over the net new money, that would be helpful. Thank you. And then I'll go to my second question.

Thiago Maffra: Thank you, and then I go to my second question. Yeah, well, yes, for sure there was a positive impact from the change in regulation for sure the banks they have less capacity to me should just type of tax and products, but it's almost impossible to say how what's the percentage of the increasing in that new money coming because of Jesus or because all the other factors is not just one factor. I understand that most of the questions here is they are trying to find one explanation; there's not one, there are many, okay, many combined levers, some or most of them that we control, some of them that is the market, the interest rate 11.5 is different from 13.75, we always said that, okay.

Thiago Maffra: Thank you, and then I'll go to my second question. Yeah, well, I will. Yes, for sure. There wasn't a positive impact from the change in regulation.

Thiago Maffra: For sure, the banks, they have less capacity to issue this type of tax-exempt products. But it's almost impossible to say how much the percentage of the increase in that new money coming is because of this or because all the other factors are not just one factor. I understand that most of the questions here are trying to find one explanation. There's not one.

Speaker Change: Yeah, well, yes, for sure there wasn't.

Speaker Change #100: a positive impact from the change in regulation for sure the banks they have

Speaker Change #100: less capacity to issue this type of tax exempt products.

Speaker Change #101: but it's almost impossible to say what's the percentage of the increase in net new money coming.

Thiago Maffra: There are many, okay, many combined levers. Some or most of them that we control, some of them that are in the market, the interest rate, 11.5 is different from 13.75. We always said that. OK. So it's important to understand that it's not just one point. Okay. So again, we always said that we don't need a much better macro environment and we don't need interest rates like to go to 8%. We don't need a stock exchange to perform well, like to, to go back to bring that new money. So we are not macro-dependent. So that's the point, and we will not have only one explanation.

Daniel Vaz: Okay. So what they saw in the first quarter and also the second one is the appetite for. I would say more diversified products, when compare like to last year that people are only looking for CG stacks exempt CDs from the banks, okay.

Speaker Change #102: because of G's or because all the other factors is not...

Speaker Change #103: Just one factor.

Speaker Change #104: I understand that.

Speaker Change #104: Most of the questions here, they are trying to find one explanation. There's not one. There are many, okay, many combined levers.

Speaker Change #104: some or most of them that we control some of them that is the market the interest rate 11.5 is different from 13.75 we always said that okay so

Daniel Vaz: Okay, regarding the corporate size any comments here, please. I think the corporate size reflects on what I told you about the using of new products to offer sure or corporate partners in the clients. And basically if you look at the rent, we didn't have the ability to get two years ago. We also didn't have this business two, two, three years ago. And basically, as we grow those products in your platform and user relationship, we are capable to do more cross sell for those clients. Right have the client and the right have the product. So those business lines should be growing in the pace of our guidance.

Thiago Maffra: So it's important to understand that it's not one point, okay? So again, we always said that we don't need like a much better macro environment and we don't need interest rates like to go to 8%. We don't need like a stock exchange to perform well like to go back to bring that new money. So we are not micro dependent, so that that's the point, and we will not have only one explanation.

Speaker Change #104: It's

Speaker Change #104: It's important to understand that it's not one point, okay? So, again, we always said that we don't need like a much better macro environment and we don't need interest rates like to go through.

Speaker Change #104: 8% we don't need like a stock exchange to perform well like to to go back to bring that new money so we are not macro dependent so that that's the point and we'll not have only one explanation

Unknown Executive: Okay, that's great, understood.

Olavo Artuso: Okay. That's great. Okay. So, if I may, on my second question, and I'll shift the discussion to the credit card business, because I saw you continue to expand your active credit card base, but I know that they mostly spend it, or drop it for the second consecutive quarter here. So guys, I just wanted to understand if this is solely related to the macroeconomic backdrop that we are living in, or if this could be related to clients that use your credit card moving to other banks or fintechs. Consider that a sort of credit card offers a similar 1% cash back, several other benefits, any color of that will be helpful.

Unknown Executive: So, I find my second question, and I'll shift the discussion to the credit card business because I saw you continue to expand its active credit card base, but I know that the multi-spanage dropped it for the second consecutive quarter here. So guys, I just wanted to understand if these are solely related. To the macroeconomic backdrop that we are leaving, or if this could be related to the clients, they use your credit card moving to other banks of syntax. Think that a sort of order credit card offers a similar 1% cash back as several other benefits. Any call or of death will be helpful to think again.

Speaker Change #104: Okay.

Speaker Change #105: That's great, understood. So, if I may, on my second question, and I'll shift the discussion to the credit card business.

Speaker Change #106: because I saw you continue to expand its active credit card base but I know that they're mostly expanded job but for the second consecutive quarter here

Speaker Change #107: So guys I just wanted to understand if this is solely related to the macroeconomic backdrop that we are living or if this could be related to clients that use your credit card moving to other banks or fintechs

Speaker Change #108: I think that sort of our credit card offers a similar 1% cashback and several other benefits. Any caller on that will be helpful. Thank you again.

Thiago Batista: So the next question is from Thiago Batista, I'm going to the sax, Tito, you may proceed. Hi, good evening everyone, thank you for the call and taking my question. Another question on the inflows for more, how do you think that can benefit revenues going forward? We did see a bit of a pick up in retail revenues, this quarter or five percent, but in the past you said your revenues are not that correlated.

Unknown Executive: Okay, yes, about credit cards, basically we have two levers here to work on. First of all, today we have two million eligible clients. Okay, so out of the almost five million clients, only two million clients from all the brands are eligible to have our credit card. Okay, so if you get the number of issued credit cards around a million cards. Okay, so it's a 50% penetration. So here we have two levers. The first one is improve the benefits that we are the choice we give to our customers. Okay, so we just released the miles points for credit card.

Thiago Maffra: Thank you again. Okay, yes, about credit cards. Basically, we have two levers here to work on. First of all, today, we have 2 million eligible clients. Okay, so out of the almost 5 million clients, only 2 million clients from all the brands are eligible to have our credit card. So if you get the number of issued credit cards, around a million cards, okay, so it's a 50% penetration rate. So, we have two levers.

Speaker Change #109: Okay, yes, about credit cards, basically we have two levers here to work on.

Speaker Change #110: First of all, today we have 2 million eligible clients, okay? So out of the almost 5 million clients, only 2 million clients

Thiago Batista: So just how do you think, you know, a nice pick up in inflows, can this translate to in a further acceleration in revenues growing forward? Just see how you think about that. And then just another question on on your EBT margin, right? I mean, you know, big improvement there. You know, how do you think about the sustainability of that margin anything that was maybe one off that that's the big improvement in the quarter? How do you see it going forward? Thank you. Okay, thank you for your question.

Speaker Change #110: from all the brands are eligible to have our credit card, okay? So if you get the number of issued credit cards, around a million cards, okay, so it's a 50% penetration. So...

Thiago Maffra: The first one is to improve the benefits that we or the choice we give to our customers. Okay, so we just released the miles point for credit cards. So we believe we can capture clients that perceive more value added on points than only invest back. So that's one.

Speaker Change #110: Here we have two levers. The first one, it's

Speaker Change #110: Dr. Prima,

Speaker Change #110: improve the benefits.

Speaker Change #110: that we, or the choice we give to our customers. Okay, so we just released the miles point for credit cards. So we believe we can capture clients that perceive more value added on points than only invest back. So that's one. And then the second one, it's...

Unknown Executive: So we believe we can capture clients that perceive more value added on points than, or only invest back. So that's one, and the second one is how we make the other three million clients eligible, of course, working with the right was absorption, with the right level of risk. So we haven't been working on increasing the number of eligible clients. So we believe that we can go back on track to capture more growth on credit cards on the next quarters.

Thiago Maffra: I will take the first one and you through the second one. So about the revenue and correlation with net new money. Of course, there is a small pick up, okay, because imagine that we have inflows and outflows, okay. But it is small when you compare like to the whole way you see that we have. So today we have almost 1.1 trillion reais of retail clients, okay, and the whole portfolio that we have is much larger than any net new money.

Thiago Maffra: So we don't see a big correlation in both of them, but yes, what why net new money is so important because that proves that we the mode of the company and the growth, the future growth. It's here. So that that's why net new money for us is the main KPR because that detects how it's going to be the company a few years down the road, okay, more than the revenue just quarter or next quarter.

Speaker Change #110: how we make the other 3 million clients eligible. Of course, working with the right loss absorption, with the right level of risk. So, we have been working on...

Speaker Change #110: increasing the number of eligible clients so we believe that we can go back on track to capture more growth on credit cards on the next quarters.

Speaker Change #110: [inaudible]

Speaker Change #110: And I, I, I, I,

Neha Agarwala: Okay, next question is from me. Hi, thank you for taking my question, and congratulations on the results on the cost of services that, in the control over COGS, is quite impressive, which also led to the growth profit expansion. Could you talk a bit about that?

Thiago Maffra: And the second one is how we make the other 3 million clients eligible, of course, working with the right loss absorption and the right level of risk. So we have been working on increasing the number of eligible clients. So we believe that we can go back on track to capture more growth on credit cards in the next quarter. Okay, next question is from Neha Agarwala from AGSPC. Neha, you may proceed. Hi, thank you for taking my question and congratulations on the results. On the cost of services, I think the control over COGS was quite impressive, which also led to the gross profit expansion. Could you talk a bit about that, and how sustainable that is?

Speaker Change #110: OK, next question is from Nihar Argawala from AGSPC. Nihar, you may proceed.

Nihar Argawala: Hi, thank you for taking my question and congratulations on the results. On the cost of services, I think the control over COGS was quite impressive, which also led to the gross profit expansion. Could you talk a bit about that, how sustainable that is? What leverage did you pull there for such a good control on the cost of services? And my second question is on the loan book. If I'm looking at the correct numbers, the credit portfolio actually went down 14% quarter on quarter. So if you could just explain why that decline in the credit portfolio. Thank you so much.

Neha Agarwala: How sustainable that is? What levels did you pull there for such a good control on the cost of services? And my second question is on the loan book. If I'm looking at the correct numbers, the credit portfolio actually went down 14% quarter on quarter. So if you could just explain why they're designing the credit portfolio. Thank you so much.

Neha Agarwala: What leverage did you pull off there for such good control on the cost of services? And my second question is on the loan book. If I'm looking at the correct numbers, the credit portfolio actually went down 14% quarter on quarter. So if you could just explain why the decline in the credit portfolio happened. Thank you so much. Hi Neha.

Thiago Maffra: Thank you for the question. I think the EBT margin rational is the same of DTR. You should look at the last 12 months margin that is currently at 28. Looking at that margin, you should be you should see a slight improvement toward our guidance levels over time. And that will eliminate some any variance quarter over quarter, how to do business mix or HR. Okay, no, that's helpful. Thank you. And just maybe just in terms of the on the revenue outlook, are you feeling more comfortable with the revenue outlook from here.

Nihar Argawala: [inaudible]

Victor Mansur: Hi, Niha. Thank you, thank you for the question. First about the cogs, I think that's reflection of operational average and they're capacity to do more business without increasing costs. And you can see both of those effects in COGS, and that's agenda, and the strength should go towards the year. And if I may go to the loan book question, basically what we did, we secretized part of our loan portfolio and move it that's your corporate bonds as a financial debatory. And this is part of our risk recycle process, and we should use those corporate bonds as collateral for rep operations against our clients and eventually to sell those operations in your ecosystem.

Victor Mansur: Thank you. Thank you for the question. First of all, the COGS, I think that's a reflection of operational leverage and their capacity to do more business without increasing, increasing costs. And you can see both of those effects in Cogs and SgNA.

Niha: Hi Niha, thank you, thank you for the question.

Speaker Change #113: First of all, the COGS. I think that's a reflection of our operational leverage and our capacity to do more business without increasing costs.

Victor Mansur: And this trend should go on for the year. And if I may go to the low-end book question, basically, what we did was we securitized part of our low-end portfolio and moved that to our corporate bonds as a financial debt obligation. And this is part of our risk recycling process. And we should use those corporate bonds as collateral for RIP operations against our clients and, eventually, to sell those operations in your ecosystem. If I understand correctly, this is new, right? You had not done this in the prior quarters.

Thiago Maffra: Any, you know, just potential catalyst to sort of accelerate the revenues, just thinking of where we are in the cycle. Yeah, not sure things for this question. The revenue for retail revenue. Can we repeat the question. Sure, yes, sorry, just on the outlook for retail revenues, right? I mean, there was a pick up this quarter. I mean, do you think that that outlook is maybe improving to some extent? Yes, we still have high rates.

Speaker Change #114: and you can see both of those effects in cogs and sgna and this trend should go towards the year

Speaker Change #115: And if I may go to the Lohenberg question, basically what we did, we securitized part of our loan portfolio and moved that to our corporate bonds.

Speaker Change #115: as a financial debenturee.

Speaker Change #115: and this is part of our risk recycle process and we should use those

Speaker Change #115: those corporate bonds as collateral for rip operations against our clients and eventually to sell those operations in your ecosystem.

Thiago Maffra: How do you see? Yeah, yeah. As we mentioned the presentation, we expect the second half of the year to be better than the first half of the year. Okay, so again, we are not giving guidance for the next quarter or for the year, but you can have in mind that the second half should be better in terms of revenues, net income and so on, because again, the guidance for 2026. It's true in place, nothing change.

Neha Agarwala: If I understand, this is new, right? You have not done this in the prior quarters.

Speaker Change #116: If I understand, this is new, right? You have not done this in the prior quarters. So what was the motivation regarding doing this?

Victor Mansur: So what was the motivation regarding doing this? It's new. It's the first time that we did that. And the idea is to create a process to recycle the risk in your loan book. And the first time, and we keep; you should see that in the future. Keep seeing that in the future, sorry.

Victor Mansur: So what was the motivation for doing this? It's new. It's the first time that we did that. And the idea is to create a process to recycle the risk in your loan book.

Speaker Change #117: It's new, this is the first time that we did that, and the idea is to create a process to recycle the risk in your loan book. It's the first time and we keep you should see that in the future. Keep seeing that in the future, sorry.

Victor Mansur: So when the asset quality was then expected, what was the reason for the recycling of the loan book? No, the quality of the assets is the same as always. Low risk, good clients, a good portfolio. And the idea here is to create instruments, recycle risk at the same time that we can provide new products to your clients. And by doing that, we can increase our capacity to originate new assets. At the same time that we create new products to our retail, to our retail distribution. And basically, that's the; that is the idea.

Victor Mansur: And we should keep seeing that in the future. Sorry. So was the asset quality worse than expected? What was the reason for this recycling of the loan book?

Speaker Change #118: So was the acid quality worse than expected?

Thiago Maffra: And if you look the numbers, the Cagers, we have to deliver on revenue for the top of the guidance is 90%, the increasing marginy BG going to the range 30 to 34, we should start like to pick up in all just metrics, so they're wise we'll not go there. Okay, but and we just mentioned that we are on track. So you can expect the like all just numbers to improve in the next quarter or.

Victor Mansur: No, the quality of the assets is the same as always. Low risk, good clients, and a good portfolio. And the idea here is to create instruments to recycle risk at the same time that we can provide new products to our clients. And by doing that, we can increase our capacity to originate new assets at the same time that we introduce new products into our retail distribution. And basically, that is the idea. Okay, and also the provision for this quarter was low. Is this related to this recycling? Partly related to this recycling and partially related to some operations that we cover that we cover from other periods.

Speaker Change #119: What was the reason for this recycling of the loan work?

Speaker Change #119: No, the quality of the assets are the same as always, low risk, good clients, a good portfolio. And the idea here is to create instruments to recycle risk at the same time that we can provide new products to our clients.

Thiago Maffra: Of course, there are both achieved, we can go down in some of the quarters until the end of 2026, but the trend is upwards. Okay, so you can expect the second half of the year to be better than the first one.

Speaker Change #119: And by doing that, we can increase our capacity to originate new assets. At the same time that we create new products to our retail distribution. And basically, that is the idea.

Victor Mansur: Okay. And after the provision, this quarter was low as this related to the three cycling. It's partially related to this recycling. And partially related to some operations that we cover, credit that we cover from other periods. Okay.

Speaker Change #121: Okay, and also the provisions this quarter was low. Is this related to this recycling?

Speaker Change #122: It's partly related to this recycling and partially related to some operations that we cover from other periods.

Thiago Maffra: Perfect, thank you very much and congratulations on the result.

Unknown Executive: Okay, the next question is from a lot of those from UBS level you may proceed. Thank you guys. Thank you for taking my question. I have to, but my first is just a follow up on my colleagues question on that new money and I totally understand this planation for this performance is quarter. It was related to the leverage you have been working off, but questioning all the other way, I understand that the change in taxes that instrument has had some effects, even I small one and also this decrease in the policy rate has some effect as well.

Victor Mansur: Okay. Okay, great. Thank you so much. Thank you for your questions. Okay, we are up on the hour. So, thank you, Maffra. Thank you, Victor. Thank you, all of you today. I apologize once again for our troubling connections. And we are available, there are teams available for any further questions. Thank you once again, and we will see or talk to each other on

Unknown Executive: Great. Thank you so much.

Speaker Change #122: Okay.

Unknown Executive: Thank you for our question. Okay.

Speaker Change #123: Okay, great. Thank you so much.

Speaker Change #124: Thank you for your question.

Unknown Executive: We are up on the hour. So thank you, Martha. Thank you, Victor. Thank you all of you participants today. I apologize once again for our troubling connections. And we are available; there are teams available for any further questions. Thank you. Once again, and we see where we talk to each other on the, on the next quarter. Thank you.

Speaker Change #125: Okay, we are up on the hour. So thank you, Maffra, thank you, Victor. Thank you, all of you participants today. I apologize once again for our troubling connections and we are available, there are teams available for any further questions.

Unknown Executive: Good bye.

Thiago Maffra: Thank you and then I go to my second question. Yeah, well, yes, for sure there was a positive impact from the change in regulation for sure the banks they have less capacity to me should just type of tax and products, but it's almost impossible to say how what's the percentage of the increasing in that new money coming because of Jesus or because all the other factors is not just one factor. I understand that most of the questions here is they are trying to find one explanation, there's not one, there are many, okay, many combined levers, some or most of them that we control some of them that is the market, the interest rate 11.5 is different from 13.75, we always said that, okay.

Thiago Maffra: So it's important to understand that it's not one point, okay, so again, we always said that we don't need like a much better macro environment and we don't need interest rates like to go to 8% we don't need like a stock exchange to perform well like to go back to bring that new money. So we are not micro dependent so that that's the point and we will not have only one explanation.

Unknown Executive: Okay, that's great, understood.

Unknown Executive: So, I find my second question and I'll shift the discussion to the credit card business because I saw you continue to expand its active credit card base, but I know that the multi-spanage drop it for the second consecutive quarter here. So guys, I just wanted to understand if these are solely related. To the macroeconomic backdrop that we are leaving, or if this could be related to the clients, they use your credit card moving to other banks of syntax, think that a sort of order credit card offers a similar 1% cash back as several other benefits, any call or of death will be helpful to think again.

Unknown Executive: The first one is improve the benefits that we are the choice we give to our customers. Okay, so we just release the miles points for credit card. So we believe we can capture clients that perceive more value added on points than or only invest back. So that's one and the second one is how we make the other three million clients eligible of course working with the right was absorption with the right level of risk. So we haven't been working on increasing the number of eligible clients. So we believe that we can go back on track to capture more growth on credit cards on the next quarters.

Neha Agarwala: Okay, next question is from me. Hi, thank you for taking my question and congratulations on the results on the cost of services that in the control over cogs is quite impressive, which also led to the growth profit expansion. Could you talk a bit about that?

Neha Agarwala: How sustainable that is what levels did you pull there for such a good control on the cost of services? And my second question is on the loan book. If I'm looking at the correct numbers, the credit portfolio actually went down 14% quarter on quarter. So if you could just explain why they're designing the credit portfolio. Thank you so much. Hi, Niha, thank you, thank you for the question. First about the cogs, I think that's reflection of operational average and they're capacity to do more business without increasing increasing costs.

Neha Agarwala: And you can see both of those effects in cogs and that's agenda and the strength should go towards the year. And if I may go to the loan book question, basically what we did, we secretized part of our loan portfolio and move it that's your corporate bonds as a financial debatory. And this is part of our risk recycle process and we should use those corporate bonds as collateral for rep operations against our clients and eventually to sell those operations in your ecosystem.

Neha Agarwala: If I understand this is new, right? You have not done this in the prior quarters. So what was the motivation regarding doing this? It's new. It's the first time that we did that. And the idea is to create a process, to recycle the risk in your loan book. And the first time, and we keep, you should see that in the future. Keep seeing that in the future, sorry. So when the asset quality was then expected, what was the reason for the recycling of the loan book?

Neha Agarwala: No, the quality of the assets are the same as always. Low risk, good clients, a good portfolio. And the idea here is create instruments, recycle risk at the same time that we can provide new products to your clients. And by doing that, we can increase our capacity to originate new assets. At the same time that we create new products to our retail, to our retail distribution. And basically that's the, that is the idea.

Neha Agarwala: Okay. And after the provision, this quarter was low as this related to the three cycling. It's partially related to this recycling. And partially related to some operations that we cover, credit that we cover from other periods. Okay. Great. Thank you so much. Thank you for our question. Okay.

Unknown Executive: We are up on the hour. So thank you, Martha. Thank you, Victor. Thank you all of you participants today. I apologize once again for our troubling connections. And we are available, the are teams available for any further questions. Thank you. Once again, and we see where we talk to each other on the, on the next quarter. Thank you.

Unknown Executive: Good bye.

Q2 2024 XP Inc Earnings Call

Request a DemoDemo

Xp

Earnings