1
Important Disclosure
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This presentation is prepared by XP Inc. (the “Company,” “we” or “our”), is solely for informational purposes. This presentation does not constitute a prospectus and does not constitute an offer to sell or the solicitation of an offer to buy any securities. In addition, this document and any
materials distributed in connection with this presentation are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would
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statements or opinions, whichever their source, contained in this presentation or any oral information provided in connection herewith, or any data it generates and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of
such information. The information and opinions contained in this presentation are provided as at the date of this presentation, are subject to change without notice and do not purport to contain all information that may be required to evaluate the Company. The information in this
presentation is in draft form and has not been independently verified. The Company and its affiliates, officers, employees and agents expressly disclaim any and all liability which may be based on this presentation and any errors therein or omissions therefrom. Neither the Company nor
any of its affiliates, officers, employees or agents makes any representation or warranty, express or implied, as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any.
The information contained in this presentation does not purport to be comprehensive and has not been subject to any independent audit or review. Certain of the financial information as of and for the periods ended December 31, 2019, 2018 and 2017 has been derived from audited
financial statements and all other financial information has been derived from unaudited interim financial statements. A significant portion of the information contained in this presentation is based on estimates or expectations of the Company, and there can be no assurance that
these estimates or expectations are or will prove to be accurate. The Company’s internal estimates have not been verified by an external expert, and the Company cannot guarantee that a third party using different methods to assemble, analyze or compute market information and data
would obtain or generate the same results.
Statements in the presentation, including those regarding the possible or assumed future or other performance of the Company or its industry or other trend projections, constitute forward-looking statements. These statements are generally identified by the use of words such as
“anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. By their nature, forward-looking statements are necessarily subject to a high degree of uncertainty and involve known and unknown risks, uncertainties, assumptions and other
factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such
forward-looking statements and there can be no assurance that such forward-looking statements will prove to be correct. These risks and uncertainties include factors relating to: (1) general economic, financial, political, demographic and business conditions in Brazil, as well as any
other countries we may serve in the future and their impact on our business; (2) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (3) competition in the financial services industry; (4) our ability to implement our business
strategy; (5) our ability to adapt to the rapid pace of technological changes in the financial services industry; (6) the reliability, performance, functionality and quality of our products and services and the investment performance of investment funds managed by third parties or by our
asset managers; (7) the availability of government authorizations on terms and conditions and within periods acceptable to us; (8) our ability to continue attracting and retaining new appropriately-skilled employees; (9) our capitalization and level of indebtedness; (10) the interests of
our controlling shareholders; (11) changes in government regulations applicable to the financial services industry in Brazil and elsewhere; (12) our ability to compete and conduct our business in the future; (13) the success of operating initiatives, including advertising and promotional
efforts and new product, service and concept development by us and our competitors; (14) changes in consumer demands regarding financial products, customer experience related to investments and technological advances, and our ability to innovate to respond to such changes;
(15) changes in labor, distribution and other operating costs; (16) our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (17) the negative impacts of the COVID-19 pandemic on global, regional and national economies and the
related market volatility and protracted economic downturn; and (18) other factors that may affect our financial condition, liquidity and results of operations. Accordingly, you should not place undue reliance on forward-looking statements. The forward-looking statements included
herein speak only as at the date of this presentation and the Company does not undertake any obligation to update these forward-looking statements. Past performance does not guarantee or predict future performance. Moreover, the Company and its affiliates, officers, employees
and agents do not undertake any obligation to review, update or confirm expectations or estimates or to release any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of the presentation. You are cautioned not
to unduly rely on such forward-looking statements when evaluating the information presented and we do not intend to update any of these forward-looking statements.
Market data and industry information used throughout this presentation are based on management’s knowledge of the industry and the good faith estimates of management. The Company also relied, to the extent available, upon management’s review of industry surveys and
publications and other publicly available information prepared by a number of third party sources. All of the market data and industry information used in this presentation involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such
estimates. Although the Company believes that these sources are reliable, there can be no assurance as to the accuracy or completeness of this information, and the Company has not independently verified this information.
The contents hereof should not be construed as investment, legal, tax or other advice and you should consult your own advisers as to legal, business, tax and other related matters concerning an investment in the Company. The Company is not acting on your behalf and does not
regard you as a customer or a client. It will not be responsible to you for providing protections afforded to clients or for advising you on the relevant transaction.
This presentation also includes certain non-GAAP financial information. We believe that such information is meaningful and useful in understanding the activities and business metrics of the Company’s operations. We also believe that these non-GAAP financial measures reflect an
additional way of viewing aspects of the Company’s business that, when viewed with our International Financial Reporting Standards (“IFRS”) results, as issued by the International Accounting Standards Board, provide a more complete understanding of factors and trends affecting the
Company’s business. Further, investors regularly rely on non-GAAP financial measures to assess operating performance and such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in
accordance with IFRS. We also believe that certain non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in the Company’s industry, many of which present these measures when reporting
their results. The non-GAAP financial information is presented for informational purposes and to enhance understanding of the IFRS financial statements. The non-GAAP measures should be considered in addition to results prepared in accordance with IFRS, but not as a substitute for,
or superior to, IFRS results. As other companies may determine or calculate this non-GAAP financial information differently, the usefulness of these measures for comparative purposes is limited. A reconciliation of such non-GAAP financial measures to the nearest GAAP measure is
included in this presentation.
For purposes of this presentation:
“Active Clients” means the total number of retail clients served through our XP Investimentos, Rico, Clear, XP Investments and XP Private (Europe) brands, with Client Assets above R$100.00 or that have transacted at least once in the last thirty days. For purposes of calculating this
metric, if a client holds an account in more than one of the aforementioned entities, such client will be counted as one “active client” for each such account. For example, if a client holds an account in each of XP Investimentos and Rico, such client will count as two “active clients” for
purposes of this metric.
“Client Assets” means the market value of all client assets invested through XP’s platform, including equities, fixed income securities, mutual funds (including those managed by XP Gestão de Recursos Ltda., XP Advisory Gestão Recursos Ltda. and XP Vista Asset Management Ltda.,
as well as by third-party asset managers), pension funds (including those from XP Vida e Previdência S.A., as well as by third-party insurance companies), exchange traded funds, COEs (Structured Notes), REITs, and uninvested cash balances (Floating Balances), among others.
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Index
01 Opening Remarks
02 1Q23 Financials
03 Q&A
3
1 Opening Remarks
1Q23 Highlights
R$ 954 Billion + 89k + 688
Client Assets Net New Clients Net New IFAs
R$ 3.5 Billion R$ 977 Million R$ 927 Million
Gross Revenue¹ EBT¹ Net Income¹
+7% YoY¹ +14% YoY¹ +8% YoY¹
Notes: 1 – Excluding the one-time non-recurring loss related to the bonds of a large corporate issuer that filed for bankruptcy in the quarter. 5
1Q23 Highlights
New EBT Margin Brand Return to
Verticals¹ Milestones Shareholders
R$2.7bn returned in LTM
Revenue (in R$ mn) EBT Margin (in %) Best financial Net Income and Payout (in R$ bn)
advisory
3.8 - 4.4
64% platform
405 by Folha
32%
29.6% 3.6
3,6% 5th
26% consecutive
year
247 12th Expected
26,0% most valuable Payout
brand in Brazil ~50%
by Interbrand Payout 1.8
YTD
0.9 Payout
1Q22 1Q23 1Q23² Guidance 23-25 2022 2023E
Notes: 1 – Includes Retirement Funds, Cards, Insurance and Credit. 2 – Excluding the one-time non-recurring loss related to the bonds of a large corporate issuer that filed for bankruptcy in the quarter. 6
Long-term strategy
Leadership in Cross sell Quality
Investments
Keep expanding our Expand offering to Superior service level
Core Business, aiming attend client needs to deliver a unique
absolute leadership in throughout their value proposition
the segment financial life
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Long-term strategy
Leadership in Cross sell Quality
Investments
Keep expanding our Expand offering to Superior service level
Core Business, aiming attend client needs to deliver a unique
absolute leadership in throughout their value proposition
the segment financial life
8
Long-term strategy
Leadership in Cross sell Quality
Investments
Keep expanding our Expand offering to Superior service level
Core Business, aiming attend client needs to deliver a unique
absolute leadership in throughout their value proposition
the segment financial life
9
Long-term strategy
Leadership in Cross sell Quality
Investments
Keep expanding our Expand offering to Superior service level
Core Business, aiming attend client needs to deliver a unique
absolute leadership in throughout their value proposition
the segment financial life
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2 1Q23 Financials
Gross Revenue
Total Gross Revenue (in R$ mn)
1Q23 One-time 1Q22 4Q22 1Q23¹
1Q23¹ Δ QoQ¹ Δ YoY¹
Reported loss Mix Mix Mix
Gross Revenue 3,326 (164) 3,489 +5% +7% 100% 100% 100%
Retail 2,569 (95) 2,664 +5% +15% 71% 76% 76%
Institutional 332 - 332 -7% -39% 17% 11% 10%
Corporate & Issuer Services 266 - 266 -3% +7% 8% 8% 8%
Other 158 (69) 227 +46% +37% 5% 5% 6%
▪ One-time non-recurring loss of R$164 million related to the bonds of a large corporate issuer that filed for bankruptcy.
▪ Adjusted by this one-time event, Gross Revenue reached R$3.5bn, a growth of 5% QoQ and 7% YoY.
Notes: 1 – Excluding the one-time non-recurring loss related to the bonds of a large corporate issuer that filed for bankruptcy in the quarter. 12
Retail Revenue (1/2)
Total Retail Revenue (in R$ mn) 1Q23 One-time
1Q23¹ Δ QoQ¹ Δ YoY¹
Reported loss
Retail 2,569 (95) 2,664 +5% +15%
Core Retail Investments 1,715 (95) 1,809 +6% +1%
Equities 1,069 - 1,069 +7% -3%
Fixed Income 332 (95) 427 +9% +0%
Funds Platform 313 - 313 +1% +17%
New Verticals 364 - 364 -10% +60%
Retirement Plans 87 - 87 -7% +17%
Cards 204 - 204 -13% +112%
Credit 41 - 41 -13% +19%
Insurance 32 - 32 +2% +42%
Other Retail 490 - 490 +10% +70%
Notes: 1 – Excluding the one-time non-recurring loss related to the bonds of a large corporate issuer that filed for bankruptcy in the quarter. 13
Retail Revenue (2/2)
Core¹ New Verticals² Other One-time loss³
+64%
10,515
95
9,793
1,756
914
571 +R$749 mn 1,320
6,401
780
194
8,309
7,345
+R$2.9 bn -R$964 mn
5,426
2020 2021 1Q23³ LTM
▪ Macroeconomic environment mostly affects the core investments (Equities, Fixed Income and Funds Platform).
▪ New verticals revenue growth of R$749 million since 2021 partially mitigates the deceleration of the core business.
Notes: 1 – Includes Equities, Fixed Income and Funds Revenue. 2 - Includes Retirement Funds, Cards, Insurance and Credit Revenue.. 3 - one-time non-recurring loss related to the bonds of a large corporate issuer that filed for bankruptcy. 14
SG&A and Comp Ratio
SG&A¹ (in R$ mn) LTM Comp Ratio² (in %)
People Non-People
-17%
1,377 29.8%
1,255
485 1,045
355
285
28.5%
899 892
760
26.9%
1Q22 4Q22 1Q23 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
LTM
40.1% 42.0% 40.4%
Efficiency Ratio²
▪ Total SG&A excluding incentives¹ reflected the cost structure adjustments implemented since late 2022.
▪ Net reduction of 782 employees in the quarter. We believe XP is right sized for a challenging macro environment ahead of us.
Notes: 1 – Excludes Revenue from incentives from Tesouro Direto, B3 and others. 2 - Calculated as SG&A ex-revenue from incentives from Tesouro Direto, B3, and others divided by Net Revenue. 3 – Calculated as People SG&A (Salary
and Taxes, Bonuses and Share Based Compensation) divided by Net Revenue. 15
EBT and Net Income
EBT and EBT Margin (in R$ mn, %) Net Income and Net Margin (in R$ mn, %)
+14% +8%
977 927
854
856 160 783 131
738
817 796
1Q22 4Q22 1Q23¹ 1Q22 4Q22 1Q23¹
29.6%¹ 28.1%¹
EBT Net
27.4% 23.2% 26.0% 27.4% 24.6% 25.4%
Margin Margin
▪ EBT margin consistent with annual guidance between 26% and 32%, converging from the bottom in 2023 to the top in 2025.
▪ EBT and Net Income didn’t benefit from incentives as in 4Q22, reinforcing 1Q23 earnings quality.
Notes: 1 – Excludes one-time non-recurring loss related to the bonds of a large corporate issuer that filed for bankruptcy. 16
Q&A
Investor Relations
[email protected]
https://investors.xpinc.com/ 18
Appendix
Non-GAAP Financial Information
Adjusted Assets (from the factors listed below) reflects our business more realistically
Simplified Balance Sheet (in R$ mn) Key factors inflating our balance sheet
[B] Retirement Adjusted Assets
Assets [A] [C] Float
Plans [A-B-C]
Total 194,441 47,806 15,269 131,365 [B] Retirement Plans
Securities - Fair Value through P&L 84,511 47,806 - 36,705
▪ AUM from XP Vida & Previdência is accounted in
Securities - Repos 11,830 - - 11,830
both assets and liabilities
Securities - Fair Value through OCI 29,145 - 12,662 16,483
[C] Float
Securities - Trading & Intermediation 2,607 - 2,607 -
Other Financial Instruments 25,921 - - 25,921 ▪ Uninvested cash from clients allocated in
Other Assets 40,426 - - 40,426 sovereign bonds
[B] Retirement Adjusted Assets
Liabilities + Equity [A] [C] Float
Plans [A-B-C]
Total 194,441 47,806 15,269 131,365
Securities - Repos 25,921 - - 25,921
Other Finan. Liab. 26,545 - - 26,545
Pension Funds 47,806 47,806 - -
Securities - Trading & Intermediation 15,269 - 15,269 -
Other Liabilities & Equity 78,898 - - 78,898
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Net Asset Value
(in R$ mn)
1Q23 4Q22 1Q23 4Q22
Financial Assets 180,747 177,761
(=) Adjusted Gross Financial Assets 18,772 18,775
Securities & Derivatives 139,577 140,481
(-) Gross Debt (9,950) (9,389)
Loans 23,107 22,211
(-) Bonds (3,497) (3,561)
Repos 11,830 7,604
(-) Debentures (2,235) (2,029)
Other 6,233 7,465
(-) Financial Liabilities (149,313) (146,194) (-) Borrowings (1,825) (1,866)
(-) Retirement Plans Liabilities (47,806) (45,734) (-) Structured financing (2,393) (1,934)
(-) Market Funding Operations (40,750) (38,094) (=) Net Asset Value 8,822 9,385
(-) Repos (25,921) (31,790)
(-) Securities & Derivatives (26,545) (22,135)
(-) Other (8,290) (8,442)
(-) Float (12,662) (12,792)
(=) Adjusted Gross Financial Assets 18,772 18,775
Adj. Gross Gross
NAV = Financial Assets - Debt
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