XP Inc. Announces Q4 2024 Financial Results
XP Inc. (NASDAQ: XP) (“XP” or the “Company”), a leading technology-driven financial services platform and a trailblazer in providing accessible, low-cost financial products in Brazil, has announced its financial results for the fourth quarter of 2024. The company’s performance over the past year highlights its resilience, strategic evolution, and unwavering commitment to innovation, efficiency, and sustainable growth.
Letter to Our Shareholders
As we reflect on the closing of 2024, I want to take a moment to express my sincere gratitude to all our clients, employees, and investors who have continued to place their trust in XP Inc. This year has been marked by global economic uncertainties, financial market fluctuations, and macroeconomic challenges. Yet, through our entrepreneurial mindset and resilient approach, we have successfully navigated these difficulties while remaining steadfast in our mission to revolutionize the financial services industry in Brazil.
Over the past two decades, XP has been at the forefront Announces of financial market transformation. Our unique culture and commitment to innovation remain our greatest competitive advantages. By constantly challenging the status quo, we have positioned ourselves not only as market leaders but as change-makers driving financial inclusion and empowerment across Brazil.
In 2024, we took a significant step forward in our mission. While we have already democratized access to high-quality investment products and financial advisory Announces services, we are now embarking on a new revolution—redefining Announces how Brazilians manage their financial lives. Our vision extends beyond investments; we are committed to offering holistic financial planning solutions that support our clients in every stage of their financial journey. Whether it is wealth accumulation, succession planning, tax structuring, or long-term financial security, our goal is to provide unparalleled advisory services tailored to each individual’s unique needs.
1. Leadership in Core Business
Market leadership remains our primary objective. To maintain and expand our competitive advantages, we continue to enhance our core business offerings, ensuring sustainable growth across different investor segments.
Innovative Product Platform
In 2024, we intensified our investment in technology and innovation to enhance our financial product offerings. Our revamped fixed-income Announces platform introduced new liquidity solutions and private credit products that rival traditional banks’ offerings. These innovations Announces resulted in a 38% CAGR in daily fixed-income trades since 2020, further solidifying our position as a market leader in Brazil.
Expanded Distribution Channels
Our distribution network has grown significantly, becoming more sophisticated and technologically advanced. We successfully expanded our distribution channels, including Internal Announces Advisory, Wealth Managers, and Registered Investment Advisors (RIAs). These efforts have already started yielding significant returns, with nearly 60% of our retail net inflows in 2024 originating from these channels.
Client Segmentation and Efficiency
We have restructured our client segmentation strategy, aligning service models with customer profiles to optimize engagement and operational efficiency. This targeted approach has led to increased market share, particularly in our Private segment, where we have made substantial investments.
High-Value Advisory Services
Our commitment to Financial Planning sets us apart in the Brazilian market. We are the only institution offering a comprehensive financial planning solution for clients Announces with assets above R$300,000. The results have been outstanding, with clients utilizing Financial Planning demonstrating significantly higher engagement, increased insurance and retirement plan adoption rates, and greater overall investment in XP’s ecosystem.
2. Retail Cross-Sell Expansion
Our strategy extends beyond investments. We are expanding our product offerings to meet all financial needs of our clients, aiming to reduce their reliance on traditional banks.
- Diversification Beyond Investments: Currently, 15-20% of our revenue is generated from non-investment-related products. This expansion has improved customer satisfaction (NPS), increased wallet share, and reduced client churn.
- Growth Potential: Despite this progress, penetration of non-investment products remains low within our client base, indicating substantial growth opportunities in the coming years.
3. Wholesale Banking Expansion
We are leveraging our expertise in retail investment services to strengthen our presence in the wholesale banking sector. Our goal is to deepen relationships with Brazil’s leading economic groups by offering innovative financial solutions tailored to their needs.
- Differentiated Model: Unlike traditional banks, our wholesale approach is capital-light, focusing on leveraging our distribution capabilities to serve middle-market Announces and large corporate clients efficiently.
- Superior Financial Performance: Our model enables us to operate with higher payout ratios and return on equity (ROE) than industry standards, positioning XP as a unique alternative in the Wholesale Banking sector.
Enhancing Profitability and Corporate Structure
In 2024, we successfully completed our corporate reorganization, strengthening our ability to deliver long-term capital returns to shareholders. The new structure optimizes funding efficiency and increases leverage potential, benefiting both our Retail and Wholesale divisions.
Key highlights of our capital strategy:
- Capital Returns: Distributed 74% of net income through dividends and share buybacks.
- EPS and ROE Growth: Our earnings per share (EPS) is expected to grow at a faster rate than net income due to continued share repurchase programs.
- Margin Expansion: We believe our current ROE does not fully reflect the potential returns on our deployed capital, and we are actively working to unlock further value.
