XP (XP) Q2 2026 Earnings Call Transcript

XP reported Q2 2026 total gross revenue of BRL 5.06B (+8% y/y) and adjusted net income of BRL 1.4B (+5% y/y). Client assets reached BRL 2.2T (+17% y/y) supported by net new money of BRL 28B (BRL 20B retail, BRL 8B corporate/institutional), while ROE rose 80 bps sequentially to 22.5% and the Basel ratio ended at 20.3% (within the target range of 16%–19% after distributions). Capital returns stayed active with BRL 1B buybacks executed by end-June plus another BRL 1B program open and BRL 500M dividends, alongside cancellation of 11.8M shares (2.3%), though credit spreads and a reduction in fixed-income primary offerings weighed issuer services. Management guided retail net new money of ~BRL 20B per quarter average for the rest of 2026 and expects normalization in the fixed-income pipeline into Q3.

Analysis

XP is increasingly behaving like a capital-light fee compounder with a banking option, not a pure brokerage beta play. The market should reward the combination of fee-based asset migration, buybacks, and share cancellation because they create per-share EPS growth even if headline revenue stays noisy; that makes the equity less dependent on a clean macro tape than most Brazil financials. The hidden upside is operating leverage from cross-sell: once an advisor relationship expands into banking, tax, and corporate services, CAC gets amortized across multiple products, which should protect margins through the next 12-18 months.

The weak spot is not the core retail franchise; it is the exposed, more cyclical capital-markets layer. Primary issuance and issuer services can remain choppy for months if spreads stay wide or election volatility crowds out risk appetite, and that would cap near-term multiple expansion. Still, the company has already reduced the risk of another mark-to-market hit by shrinking the book, so the second-order effect is that future downside from spread widening should be smaller even if volumes stay soft.

Contrarianly, the consensus may be underestimating the strategic value of the SMB launch and AI advisor as distribution wideners rather than cost-savers. If those tools lift mass-affluent conversion and improve advisor productivity, XP can add clients without linear headcount growth, which is a better 2027 story than the market is likely modeling. What would falsify the thesis: a sharp drop in retail net new money below the guided run-rate, evidence that fee-based asset adoption stalls, or a renewed decline in primary issuance that persists into the next two quarters.

Key Decisions for Investors

• Long XP on post-earnings weakness over the next 1-3 trading sessions; base case is that the market underprices per-share capital return and fee-mix improvement. Risk/reward skews favorable as long as the stock does not re-rate above a full-growth multiple before Q3 data.
• Pair trade: long XP / short BTG for the next 1-3 months. XP has the cleaner path to EPS accretion from buybacks and a more visible fee-based transition, while BTG remains more exposed to capital-markets cyclicality and broader credit beta.
• Sell downside hedges only after confirming Q3 primary-market normalization; until then, maintain a cautious long with put protection into the next 6-8 weeks because issuer-services recovery remains the main swing factor.
• Use a 6-12 month bullish options structure on XP rather than outright leverage if available; the thesis is a slow-burn multiple expansion story driven by mix shift and capital returns, not an immediate one-quarter re-rating.
• Set a hard watch item: if retail net new money or fee-based asset mix decelerates over the next two quarters, cut the long. That would signal the consultancy model is not translating into durable monetization.