XP Q2 2025 Earnings Report

XP EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.39
• Beat/Miss: N/A
• One Year Ago EPS: $2.03

XP Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $834.72 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

XP Announcement Details

• Quarter: Q2 2025
• Date: 8/18/2025
• Time: After Market Closes
• Conference Call Date: Monday, August 18, 2025
• Conference Call Time: 5:00PM ET

XP (NASDAQ:XP) provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.

XP Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 net income hit a record BRL 1.321 billion (18% YoY), while ROE expanded to 24.4% (+223 bps) and diluted EPS rose 22% YoY, aided by the ongoing share buyback program.
• Positive Sentiment: Client assets (AUM + AUA) reached BRL 1.9 trillion, up 17% YoY, and active clients grew 2% to 4.7 million, reflecting continued franchise expansion.
• Negative Sentiment: Retail net new money totaled BRL 16 billion while corporate and institutional segments saw BRL 6 billion in outflows due to macro liquidity constraints, though management remains confident in returning to BRL 20 billion quarterly inflows.
• Neutral Sentiment: SG&A expenses rose 10% YoY, driven by marketing and technology investments, yet the efficiency ratio improved by 161 bps to 34.5% LTM, underscoring disciplined cost management.
• Positive Sentiment: Capital ratios are robust—BIS at 20.1% and CET1 at 18.5% versus a ~12% peer average—and the company plans to distribute over 50% of profits through dividends and a remaining BRL 1 billion buyback.

Presentation

[Thiago Maffra, Chief Executive Officer at XP]

Good evening, everyone. I appreciate you all joining us today for the second quarter twenty twenty five earnings call. So half a year is already behind us, but there is much more to come. We are still working hard, I would say, in an obsessive way to keep evolving our clients' journey experience and product offering.

[Thiago Maffra, Chief Executive Officer at XP]

2025 has demonstrated to be more challenged than we estimated, demanding more efforts from all our teams to keep growing our business in a profitable way. As a result, we are continuously increasing our profitability. Now analyzing the main KPIs. The first one is client assets, AUM, and AUA, for which we posted BRL 1,900,000,000,000.0, a 17% growth year over year. Total advisers accounted for 18,200 represent flat figures year over year.

[Thiago Maffra, Chief Executive Officer at XP]

And on active clients, we posted 4,700,000 clients with 2% growth year over year. During the quarter, gross revenues marked BRL 4,700,000,000.0, with a 4% growth year over year. EBT year over year is 5% lower, reaching 1,300,000,000.0, mainly because last year, we had positive impacts from overhead, turning this quarter not like for like. And on the bottom line, it's another record. We achieved the highest net income in our history, reaching 1,321,000,000.000.

[Thiago Maffra, Chief Executive Officer at XP]

It represents an 18% year over year growth. On profitability, we achieved 24.4% ROE during the quarter, a two twenty three bps expansion versus second quarter 'twenty four, 10 out of 11 quarters posting consecutive growth. This means 10 out of 11 quarters posting consecutive growth. On capital ratio, we printed a comfortable level at 20.1. It represented an increase of 110 bps quarter over quarter.

[Thiago Maffra, Chief Executive Officer at XP]

Regarding diluted EPS, we posted 22% growth year over year, another quarter in which it grew faster than net income, driven by our share buyback program execution. As we speak, we still have a share buyback program of BRL 1,000,000,000 to be executed until next year. As I mentioned during last quarters, our capital distribution plan is aligned with our guidance, and we will operate the business with a BIS ratio between 1619%. Now let's see more details on the next slides. Since last quarter, we have been sharing new info to provide a better understanding of our ecosystem, considering institutional clients in total client assets and provided assets under management from our asset management business and AUA from our fund administration business.

[Thiago Maffra, Chief Executive Officer at XP]

Said that, our total clients, AUM and AUA, comprehend almost 1,900,000,000,000.0, which represented a 17% growth year over year. On the right hand of the slide is presented how net new money evolved. This net new money is only related to client assets. This quarter, we market billion dollars in retail net new money and minus $6,000,000,000 in corporate and institutional. It's important to mention that during the second quarter, SMEs and large corporates' net new money reflected the dynamics of the current macro scenario.

[Thiago Maffra, Chief Executive Officer at XP]

First, due to payment of higher interest expense, companies have less liquidity than before. Second, in order to minimize this liquidity constraint, some companies withdrew part of their investments with us as they were used in reciprocity for credit lines with other players. On the retail side, the lower tax exempt volumes in GCM impacted primary offerings allocation and consequently, the net new money coming from individuals. We keep developing our product offering and capabilities to constantly offer the best investment alternatives to clients, which should drive higher net new money in the long term. I would say that the current environment has proven to be more challenged than we expected at the beginning of the year, especially for investment banking origination activity.

[Thiago Maffra, Chief Executive Officer at XP]

However, we still have a better GCM pipeline for the second half of the year, new investment products offering and other initiatives supporting our efforts to achieve retail net new money averaging billion dollars per quarter this year. On the next slide, let's delve into our retail strategy. Here, I would like to address some topics which are connected to our business model. Today, the company presents a more complete ecosystem with retail, institutional and corporate divisions fully integrated to generate investment opportunities. This benefits us in many instance.

[Thiago Maffra, Chief Executive Officer at XP]

One of them is the fixed income platform, in which we are much more complete now, being one, the largest distributor of midsized banks time deposits second, innovative in developing new instruments such as the Boundary PAC structure notes and third, also having a robust wholesale bank franchise with a corporate secured book to serve retail clients. As part of our business model, to engage clients on another level, we also launched new verticals in strengthening our investments portfolio, while attending clients to demand in banking, insurance, retirement plans, global account, FX and now consortium. This competitive ecosystem enabled us to present higher profitability during the last years. And there is much more to do since we will keep investing in channel diversification, expanding sales teams, improving our product platform experience with a more accurate client offering and improving our intelligent segmentation. Recently, we also launched new guidelines to the AFAs, sharing our knowledge, tools and methodologies, focusing on an opportunity to increase productivity, responsiveness and efficiency.

[Thiago Maffra, Chief Executive Officer at XP]

And independently, if it's through XP internal teams or AFAs, we also developed and agreed in a new and more comprehensive way to serve our clients. New rules are aligned with one objective, to improve client experience. Our main goal is to keep serving clients with excellence, no matter in which channel or remuneration model they have chosen. With this new way of growing business, we are convinced that we have a more sustainable revenue model and profitability is a consequence. For sure, the current diversified ecosystem defines XP as a defensive business with long term growth.

[Thiago Maffra, Chief Executive Officer at XP]

We are confident that our unique business model will keep evolving to achieve our long term goals, which is to become the leader in investments in Brazil. Moving to the next slide. We see on the left hand side how we serve clients with different models, channels and how XP is remunerated. By the way, we have already launched fee based model a long time ago, anticipating what's becoming reality today. It means that IFAs and internal advisers can attend clients with transactional fees or fee based model according to clients' preference.

[Thiago Maffra, Chief Executive Officer at XP]

We also have RIAs and consultants, which work in a fee based model, attending clients with asset custody in different platforms. What we see today from the client perspective is a higher demand for fee based model when compared to the recent past. Today, the fee based model represents only 5% of our total client assets. Looking at developed markets, for example, The U. S, the fee based model achieved around 50% share of clients' assets.

[Thiago Maffra, Chief Executive Officer at XP]

If this is a trend in Brazil, we are ready to serve our clients. Our capacity to attend clients with different models differentiate us from competitors, and it's translated into more share of wallet and longer lifetime. Moving now to the next slide about retail cross sell. As we have stated before, we have implemented new initiatives and products to diversify our revenue streams during the last years. Starting with credit card.

[Thiago Maffra, Chief Executive Officer at XP]

It grew 8% year over year, marking $12,400,000,000 in TPV during the quarter. As we anticipated last quarter, we launched new products targeting affluent and private banking clients. We estimate that with the new value proposition, cards should accelerate in the next years. Life insurance written premiums posted 45% growth year over year. As we said in recent quarters, our insurance business is a growth avenue, which is still at its early stage.

[Thiago Maffra, Chief Executive Officer at XP]

Since it presents a huge penetration potential, we understand that we'll keep growing at a fast pace on a quarterly basis. On retirement plans, our client assets posted 15% growth year over year on the second quarter and reached 6,000,000,000 We keep expanding our sales force to increase our relevance in this industry since our market share is mid single digit, and there is a relevant addressable market to penetrate during the next years. In new products, we consider FX, global investments, digital account and consortium. Altogether, they presented a 146% growth year over year, with revenues reaching $256,000,000 this quarter. It's important to note that Consortium came from scratch, and it's gaining traction month after month.

[Thiago Maffra, Chief Executive Officer at XP]

Moving to the next slide, we will address our wholesale bank evolution. Taking GCM into consideration, this quarter we saw decent industry volumes, but not close to last year's. Coupled with that, some players became more aggressive in pricing, trying to gain market share and therefore, resulting in lower fees. Finally, tax incentivized products have lost share in total industry volumes during this quarter. For the next quarter, pipeline is solid.

[Thiago Maffra, Chief Executive Officer at XP]

We have more opportunities, and there is a chance to reaccelerate our revenue growth. Regarding XP's broker dealer, it was another positive quarter, and we became the leader in the local industry with 17% market share. As we saw this quarter, we still expect to see improvements bit by bit until 2026. This quarter, we kept the same size of our corporate secured book with 34,000,000,000. Bear in mind that we can have a change in tax rules, which can impact currently tax exempt fixed income instruments.

[Thiago Maffra, Chief Executive Officer at XP]

We are now expecting to increase this book during the year. The rationale behind this is that companies will try to anticipate their debt issuance before the change. Also, for next year, with elections in sight, we are likely to see an increasing volatility and therefore, a reduction in corporate clients' appetite for new issuance. So our strategy, that being the case, is to keep this warehouse book until we sell it to our retail clients during the next year. To conclude my presentation, I would like to reinforce that our innovative offering, advisory model, cost and capital discipline are translating into a higher profitability, even considering the more challenging scenario.

[Thiago Maffra, Chief Executive Officer at XP]

Our ecosystem is way more complete than years ago, and there is a big opportunity in front of us to expand our core business, our retail cross sell and our wholesale activity. We are confident that by executing this, we reach our goals regarding market leadership in investments and also regarding our long term growth. Now I will hand it over to Victor, who will provide a deeper look into our financial performance this quarter, and I will be back for the Q and A session.

[Victor Mansur, Chief Financial Officer at XP]

Thank you, Umafra. Good evening, everyone. It's a pleasure to be here with you to discuss our financial performance for the 2025. Starting with total gross revenues. Total gross revenues for the quarter reached $700,000,000 representing a 4% increase year over year and a 2% increase quarter over quarter.

[Victor Mansur, Chief Financial Officer at XP]

It was another quarter that retail gained participation in total revenues, now representing 77% out of total. This quarter, once again, our main driver for retail growth year over year were fixed income and other retail, which includes retail new verticals such as global accounts and consortium. On the Wholesale Bank, corporate was the highlight, partially offsetting the negative impacts on issue services due to a tough comp from 2Q twenty twenty four. I will share more details during the next slides. Retail revenue posted billion in the quarter, a 9% growth year over year and a 4% growth quarter over quarter.

[Victor Mansur, Chief Financial Officer at XP]

The quarter growth was mainly driven by equities, which presented a higher ADTV in the period. Equities printed slightly more than BRL1 billion, with 7% growth quarter over quarter. On a year over year perspective, fixed income was the main contributor growing 20% and reaching million dollars in revenue. It's important to mention that in other retail concept, the main contributor is the float remunerations, where we had higher average volumes if high interest rates during the quarter. Now let's move to the next slide with Corporate and Issue Services.

[Victor Mansur, Chief Financial Officer at XP]

Before moving to the quarter results, it's important to mention that on 2Q twenty twenty four, we posted all time high corporate and issue services revenues, backed by a strong DCM activity. Therefore, we have a tough comp for this quarter. Issuer Services presented million dollars minus 30% year over year and a minus 5% quarter over quarter. On the other hand, corporate revenues posted a solid 14% increase year over year and was flat quarter over quarter. It reached million dollars supported by our capacity to offer different solutions to our clients, mainly if derivatives.

[Victor Mansur, Chief Financial Officer at XP]

Moving on to the next slides, we will explore our SG and A and efficiency ratios. Our SG and A expenses totaled billion in this quarter, with a 10% growth year over year and also quarter over quarter. We keep investing in our business and this quarter we had a higher expense in the non people category, most of it explained by marketing and technology investments. During the quarter, despite this slower pace in our revenue growth, our operational cost discipline supported our efficiency ratio at 34.5% last twelve months. When compared to last year, our efficiency ratio improved 161 basis points.

[Victor Mansur, Chief Financial Officer at XP]

We will keep our plan to improve our business efficiency, and this will come in parallel with new investments that will continue to be made aiming to enhance our tech platform, our product offerings and sales team expansion. Moving to the next slide, let's see our EBT. Just to recap, last year, we had positive EBT impact from the overhead related to the head of certain assets and liabilities. Therefore, EBT is not like for like one year comparison. On 2Q twenty twenty five, we printed BRL1.3 billion EBT, which represented a 4% increase quarter over quarter.

[Victor Mansur, Chief Financial Officer at XP]

Even considering the issue services impact on our revenues, we are able to expand our EBT margin by 50 basis points. On the next slide, we see the net income. Net income achieved billion, an 18% growth year over year and a 7% growth quarter over quarter. Net margin expanded by approximately 130 basis points quarter over quarter and three twenty basis points year over year, reaching 29.7% in 2Q twenty twenty five. In our revenue mix for this quarter, higher secondary market activity compensated lower volumes on investment banking, impacting our effective tax rate.

[Victor Mansur, Chief Financial Officer at XP]

This translated into a new record high net income for a quarter with significant EPS growth. Let's focus on earnings per share and ROE details over the next slides. Our diluted EPS in 2Q twenty twenty five reached BRL2.46 per share. As we continue the execution of our share buyback program, canceling the respective shares acquired, the EPS growth pace was again faster than our net income growth. In the quarter, our diluted EPS posted 22% growth, while our net income grew 18%, both on a year over year basis.

[Victor Mansur, Chief Financial Officer at XP]

Our OTE market, 30.1%, two ninety basis points higher year over year. Our ROE grew on a yearly and a quarterly basis, reaching 24.4%. This represents two thirty basis points increase in comparison to the same quarter last year. These numbers I have just mentioned are important indicators that we keep generating consistent income returns to our shareholders. Finally, moving to capital management.

[Victor Mansur, Chief Financial Officer at XP]

As we have planned, we keep our target of distributing dividends and executing share buyback programs. Combined, their volumes should be above 50% of net income for 2025 and 2026. We already have a share buyback program of BRL1 billion to be executed until next year, and new announcements will be made according to the Board of Directors' decision. Moving to the second part of capital management on the next slide. This is the last topic of my presentation, and we can see on the left hand side that our BIS ratio in a very comfortable level of 20.1%.

[Victor Mansur, Chief Financial Officer at XP]

On the same rationale, our CET1 is at 18.5%, which is way higher than peers average, if 12%. On the high hand side of the slide, we can see that our total RWA to total asset ratio was 27%, which represents the third reduction in a row and 4% lower year over year. Total RWA remained steady quarter over quarter and grew 9.8% year over year, reaching billion dollars As I said last quarter, RWA should grow at a moderate pace when compared to net income, and it was the case in this quarter, since net income posted 18% growth year over year. As Maffra said before, the potential new tax regulation may change the DCM dynamics and therefore impacting our willingness to warehouse more assets to distribute during the 4Q and 2026. It's important to highlight that our VaR market 13 basis points of our equity or million dollars demonstrating our risk discipline since it was 4% lower year over year.

[Victor Mansur, Chief Financial Officer at XP]

And now we can go to the Q and A.

[Executive]

Okay. We're going start our Q and A session. And the first question is from Eduardo Hosman from BTG. Eduardo, you may proceed.

[Eduardo Rosman, Analyst at BTG Pactual]

Hi. Hi, everyone. Now my question here is on on capital generation and dividends and buybacks. Right? So just help us understand a little bit more your capital generation because it seems that you're you've been able to improve it this quarter.

[Eduardo Rosman, Analyst at BTG Pactual]

Actually, you are you are growing your capital base, I think, faster than than your net income. Right? So but you're still way below the level this year in the level of buybacks and dividends when compared to last year. Right? So can we see an acceleration of that now in the second quarter?

[Eduardo Rosman, Analyst at BTG Pactual]

How how do you see that? We see that you have this soft guidance of above 50% for 2025 and 2026. But can you please help us with more details?

[Victor Mansur, Chief Financial Officer at XP]

Thank you for Hi, Osman. Good evening. Thank you for your question. First, dividing the answer here in some parts. First one, as we anticipated, the net income would grow a bit faster than the RWA over this year, delivering some leverage in capital terms.

[Victor Mansur, Chief Financial Officer at XP]

And I think that was the case. Also, as you comment, we didn't distribute as much of the net income as we generated over this quarter. The second part, we are still capturing a bit of leverage over the four thousand nine and sixty new regulation. And the benefits will be delivered over the year in the DRC and the market risk, principally in the credit spread risk inside of market risk. The second part will be delivered over the risk weighted assets or operational risk.

[Victor Mansur, Chief Financial Officer at XP]

Also, we expect to see that over the next quarters. Another part here talking about the trend for the year. We expected to see the RWA growing slower than the net income and the new tax regulation may change a bit the dynamics of the DCM market. And depending on how it goes, we may warehouse a bit faster than initially expected to take advantage of the demand from clients to issue before the regulation takes place in 2026. Even though we don't expect any of those to impact our target to pay more than 50% of our profit this year because we still have a lot of spare capital.

[Victor Mansur, Chief Financial Officer at XP]

And remember here, our CET1 ratio is at 18% and the average of the industry is at 12%, so a lot of space. So we may announce the rest of the payout over the rest of the year. And the discussion between dividends and buybacks depend on the price of the stock and we need to discuss that for Board. Crystal clear.

[Eduardo Rosman, Analyst at BTG Pactual]

Thanks a lot, Mosul.

[Executive]

Okay. Next question is from Yuri Fernandes, JPMorgan. Yuri, you may proceed.

[Yuri Fernandes, Executive Director at JP Morgan]

Thank you, Hi, I have a a question regarding our corporate, like, corporate lending strategy. I know it's something small for you, but you have been discussing new products, new strategies. And a and a question I have is if corporate really matters for the entire ecosystem. When we go to your AUT, we see that the commercial is the is the portion, like, not growing as much and, like, actually, creates an AUT and that's the money the same. So just trying to understand if you how how how is your perception about corporate planning and if you believe this could be something that is missing for your ecosystem and your tracking? Thank you.

[Executive]

Hi. Yuri here. Could you repeat the question? We we couldn't hear in the beginning. Sorry about that.

[Yuri Fernandes, Executive Director at JP Morgan]

No. No worries. Let let me let me speak closer to to the mic here. So I I would like to understand a little bit about corporate lending. Did you believe corporate lending is important for your strategy overall?

[Victor Mansur, Chief Financial Officer at XP]

Yuri. This is Victor. Thank you for the question. Our idea in corporate lending is the same as other product we originate to sell. You may see the corporate book growing, but everything that we put in, we expect to put out at some moment in time.

[Victor Mansur, Chief Financial Officer at XP]

So the growth you see in the credit portfolio is exactly that. The portfolio grew hopefully BRL3 billion, and that will go under a securitization and we're going to sell those assets over the next quarters.

[Yuri Fernandes, Executive Director at JP Morgan]

Thank you, Mosul. But I don't believe like being more or less active here, it's could be more helpful for your operation.

[Victor Mansur, Chief Financial Officer at XP]

Yes, it could. But the same as capital markets, we have our risk appetite. And if you are buying credit to sell or originate a security to sell, it occupies the same risk space. So we are not going to increase our portfolio over our risk appetite because of any other strategy because they use the same pocket.

[Yuri Fernandes, Executive Director at JP Morgan]

Perfect. Thank you.

[Executive]

Okay. Next question is from, Thiago Bautista, UBS. Thiago, you you may proceed.

[Thiago Batista, Executive Director at UBS Group]

Hi, guys. Are you hear me?

[Thiago Maffra, Chief Executive Officer at XP]

Yes. We can.

[Thiago Batista, Executive Director at UBS Group]

Okay. Hi, Maffra, Vito, Parisi, Antonio. I have two questions. Maffra, in the beginning, you commented about, the new initiatives to try to speed up the net new money on XP in the second half of the year. Can you give us a little bit of more details about those initiatives?

[Thiago Batista, Executive Director at UBS Group]

And second one, about the guidance for next year. Are you still comfortable with the guidance that you gave, I would say, two or three years ago? If you look to consensus for this year on top line, consensus is something close to BRL20 billion of top line. So to achieve the low end, you need to expand 14%, 1.5%, next year. Seems it's still feasible, but, I wanted to hear, for you guys, if the guidance for next year is is still, achievable.

[Thiago Maffra, Chief Executive Officer at XP]

Thank you for the question, Thiago. The first question about, net new money. As we mentioned on the presentation, we still see the $20,000,000,000 per quarter in retail as a reasonable level for the next quarters. Of course, if we see a change in the macro environment, starting interest rate cuts or something like that, we should see the 20,000,000,000 accelerating. But for now, that's the level that we are comfortable.

[Thiago Maffra, Chief Executive Officer at XP]

Of course, this quarter, it was a little bit tougher on SMBs and corporate lending, but on and corporate segment, but we are confident that the EUR 20,000,000,000 is it's a good to a good level. How we get there? There are a lot of initiatives in the company. If you go back a few years, I would say that the main one was channel diversification. Back in 2021, we only had one channel, what we call the B2B, the IFA channel.

[Thiago Maffra, Chief Executive Officer at XP]

Today, we have the internal advisers. We have the RIA model. So if you look at the numbers today, more than half of the net new money is coming from the new channels. And we keep investing in increasing the number of internal advisers, the number of IFAs on our network. So expansion, it's one of the levers here.

[Thiago Maffra, Chief Executive Officer at XP]

The second one, when you have a tougher environment and higher interest rates competing with product CGs from the banks, especially the tax exempt ones, it's not that easy. So all the time, we are creating new products to compete with the banks. We just launched some new products here this quarter. They are performing very well. It's a type of fund with senior tranche, and it's a Selic rate here and tax exempt.

[Thiago Maffra, Chief Executive Officer at XP]

So it's a very good one. So we are all the time trying to create products to compete with the banks. And we do also partnership with some of the public banks and some other banks through auctions or through bilateral distribution. So all the time, we were trying to originate products. I would say the third one and probably the most short term and effective tool here, it's how we increase the productivity of our IFAs, okay?

[Thiago Maffra, Chief Executive Officer at XP]

So we have been investing a lot of time, as I said, on the first quarter, now helping the IFA channel to increase productivity through technology, through, sales management. We have some people in some of the operations, and we are seeing the numbers starting to pick up. And the last one, but it's more like, I would say, term, we have been investing a lot on increasing the level of service, the way of serving our clients through financial planning, through wealth planning, succession, tax planning and so on. We have created our own internal models. We have been training all the AFAs.

[Thiago Maffra, Chief Executive Officer at XP]

But I would say here, it's more like a medium term, especially on the current scenario where buying a CG at 15%, it's probably a good option for some of the investors. It's harder to make them move to XP. But on the medium term and long term, for me, this is the biggest, opportunity we have like increasing the way of serving in the market and creating a new level of servicing investing in Brazil. And the second question was guidance for Yes. Next we are still pursuing the guidance for next year. Of course, right now, we are like pursuing the bottom of the guidance, okay? But we are still pursuing. For this year, we believe that the number, for revenue that we are pursuing is still around 10%. Of course, you saw the numbers for the first half of the year.

[Thiago Maffra, Chief Executive Officer at XP]

They are a little bit lower, 5.5% against 10%. But we are very confident that the numbers will accelerate on the second half and the growth rate will be higher on the second half than the first one, okay?

[Thiago Batista, Executive Director at UBS Group]

Thanks, Mantra. Very clear.

[Executive]

Okay. Next question is from Mario Pieri, Bank of America. Mario, you may proceed.

[Mario Pierry, Managing Director at Bank of America Merrill Lynch]

Hey, guys. Thanks for taking my question. Mahfra, can you give us a little bit more color on the on inflows so far in the third quarter? Because again, it sounds as if you're confident that you can return to this BRL20 billion per quarter. Are you seeing have you seen so far the first half of this quarter a number close to that level that gives you confidence?

[Mario Pierry, Managing Director at Bank of America Merrill Lynch]

So that's my first question. My second question is related to your EBT margin. Yes. It continues to improve. However, you are still are below, right, your medium term guidance, and it seems like revenues are growing a little less than you anticipated even though you're still maintaining the plus 10% for this year.

[Mario Pierry, Managing Director at Bank of America Merrill Lynch]

Is there anything you can do on the cost side if the revenues don't come through this year? Thank

[Thiago Maffra, Chief Executive Officer at XP]

you, Mario, for the question. We'll take the first one. We cannot talk about the net new money for the quarter so far, but, my answer for you will be we are confident in delivering the $20,000,000,000, or around $20,000,000,000 for the next quarters, as I mentioned before.

[Victor Mansur, Chief Financial Officer at XP]

Hi, Mario. Taking the second part here about EBT and SG and A. First, talking about EBT. Our product and the EBT depends on the product mix as we discussed it before and also the tax rate. And the trend in both of them should be trading around this quarter if the market keep the way it is.

[Victor Mansur, Chief Financial Officer at XP]

And talking about SG and A, we delivered a lot of reduction in the efficiency ratio over the last two years, 400 basis points. And since we keep investing in strategic areas as new advisors and technology and you name it, we may see the index more flattish over this year. And it's valid to reinforce our commitment to cost control and efficiency even though, but we are not going to stop investing in your core because of a bit more of unpredictable levels of revenue coming from their wholesale banking size. As Mavra said, 2026, there is a lot of time to the end of 2026. And for now, we are comfortable if the levels.

[Mario Pierry, Managing Director at Bank of America Merrill Lynch]

Okay, that's clear. Let me rephrase the first question then. When we look at inflows during the second quarter, did you see an improving pattern throughout the quarter? On a monthly basis, are you seeing inflows improving? Or did you see them improving in the quarter?

[Mario Pierry, Managing Director at Bank of America Merrill Lynch]

Or is it relatively the same amount of inflows per month?

[Thiago Maffra, Chief Executive Officer at XP]

Mario, I will give you the same answer that I gave before. I believe we can deliver the BRL 20,000,000,000. If you get the last quarter, it was 16. Imagine that one customer or two could make the difference here. So $20,000,000,000 is the number here.

[Thiago Maffra, Chief Executive Officer at XP]

And around $20,000,000,000 it could be a little bit higher or a little bit lower, okay? But that's the pace right now.

[Mario Pierry, Managing Director at Bank of America Merrill Lynch]

Next

[Executive]

question is from Marcelo Visayi, BB. Marcelo, you may proceed.

[Marcelo Mizrahi, Equity Research - Head of Latam Banks & Financials at Bradesco BBI]

Hello, everyone. Thanks for the opportunity to do the question here. So my question is regarding, again, about the corporate portfolio, which was a huge growth in a quarterly basis and not too much in a yearly basis. But just to understand what's the what's the the type of this credit? What's happening exactly here?

[Marcelo Mizrahi, Equity Research - Head of Latam Banks & Financials at Bradesco BBI]

And looking forward, another question is regarding the net new money of the corporates. To understand if there are any new strategy here, if there are any news here to justify this net new money negative on the corporate side? Okay, thank you.

[Victor Mansur, Chief Financial Officer at XP]

Thank you for your question. Victor here. The first part the first part about credit portfolio. As we said before, those are credit we originated to sell. So basically, those are operations we did with corporates and we originate receivables that will be securitized and then sold to our clients base.

[Victor Mansur, Chief Financial Officer at XP]

That's something that we did before over the other quarters and it's the same that we're going to do again. So we expect to sell that. And talking about the corporate, the new money, I think the problem here is the dynamics of the market. We are seeing we begin to see that in the first quarter and then the trend intensify the beat in the second quarter. What we are seeing, the banks that give credit to the companies, they are asking for reciprocity in terms of investments to deliver some credit lines.

[Victor Mansur, Chief Financial Officer at XP]

Since we are not in this business and we are not able to give the main product that is credit, we are seeing the money flow to banks that usually have some products as cash flows, anticipation of cards and etcetera. So that's basically the case.

[Executive]

Okay. Thank you. Moving to the next question, Chito Labarta from Goldman. Chito, you may proceed.

[Tito Labarta, Vice President at Goldman Sachs]

Hi, good evening. Thanks for the call and taking your question. My question, just following up a little bit more on the revenue growth, right? I mean, you're maintaining the 10% growth for this year, around 10%. Martha, you said it should accelerate the second half of the year.

[Tito Labarta, Vice President at Goldman Sachs]

If you break that down, right, retail growing 9% year over year, so that would that's a a big closer. I guess, first, do you think retail in and of itself will accelerate in the second half of the year? Or two, is it more the issuer services, the corporate, you know, the other lines you expect? Mean those obviously did accelerate, so given those are somewhat weak first half of the year. But just so we can break out between retail and other revenues and which lines can drive that revenue growth closer to 10%?

[Victor Mansur, Chief Financial Officer at XP]

Tito. This is Victor. So basically, we can break that revenue growth between the first half of the year and the second half if three factors. The first one is very easy to explain. We have 6% more business days, so more business days, we have more trading days, more interest rates over our capital and clients cash and also a higher SILIQ eight in the second half of the year against the first.

[Victor Mansur, Chief Financial Officer at XP]

That's the first part of the explanation. The second one is the new verticals and new advisors. So basically, we keep hiring advisors and we have a lot of products that are still rollout and are growing a lot as international investments, consortium and other products in the new verticals portfolio. And the last one that is more volatile is the product mix. If we have a second quarter, if a DCM that is stronger and more primary offering from funds, we may see a lift in retail revenues and also in the issued services revenues.

[Victor Mansur, Chief Financial Officer at XP]

So basically, those are the three components and why we are expecting to have higher revenues in the second half against the first.

[Tito Labarta, Vice President at Goldman Sachs]

Great. No, that's helpful, Victor. Just one quick follow-up. Maybe on the fixed income revenues, which is still strong at 20% year over year, although it did fall a little bit in the quarter. I mean, mentioned higher rates.

[Tito Labarta, Vice President at Goldman Sachs]

How do you think about are you getting to sort of like the peak level on the fixed income? Or can that still continue to outpace the other segments just on a relative basis, how you see the fixed income rather than relative to the other given the where we are on the wage segment?

[Victor Mansur, Chief Financial Officer at XP]

Okay, Tito. I heard the first part of the question, but the second was a bit confusing here. But I will try to answer here. First, in fixed income, it's important to mention that for retail clients, we are in the highest ever Selic rate in almost twenty years. So we are in the highest level of the cycle.

[Victor Mansur, Chief Financial Officer at XP]

So in the perception of the clients, they never had interest rates spot interest rates that is so that's as high as now. So why is it important to mention that? Because clients, don't go longer in duration when that happens, if this is low in the interest rate curve. So what we are seeing is increasing in volume, but decreasing ROA given that duration profile. So when interest rate starts falling or the interest rate has a more normal shape, we may see the duration going higher again and they are way increasing.

[Victor Mansur, Chief Financial Officer at XP]

But that's a bit of the dynamics of fixed income right now. And what can change that over the second half of the year is the DCM market and the primary offerings that may go to market if the pipeline goes as it is because of the new tax regulation. So a lot of primary offerings attract clients and we may see they get longer in duration again. So basically, we expect the fixed income line to keep your performance well and depending on the primary market in DCM, when we see this number a bit higher.

[Tito Labarta, Vice President at Goldman Sachs]

Thanks. That's good. Thank you.

[Executive]

Next question is from Arnaud Shirazi from Citi. Arnaud, you may proceed.

[Arnon Shirazi, VP - Equity Research at Citi]

Hi, all. I have two questions here. My first one is related to non people related expenses. We saw a 38% year on year increase. I know that it was explained by marketing and also technology, but it seems a little bit too much for me.

[Arnon Shirazi, VP - Equity Research at Citi]

And, also, the second one is related to tax. How would the the tax increase, especially on offshore funds, has been evolving, And what drove the positive income tax rate for this quarter? Thank you.

[Victor Mansur, Chief Financial Officer at XP]

Okay. Thank you. Thank you for question. First here talking about SG and A, we had a lot of investments in marketing. We had some events that are the first time that we're doing the size that we did.

[Victor Mansur, Chief Financial Officer at XP]

We had the B2B experience event for all our IFAs network outside of Brazil where we announced some important measures for the year. And second is the GAV is agro business event here in Brazil that we sponsored and it's very important to us because we get closer to the clients that issue tax exempt notes, corporations that are able to issue tax exempt notes. Also investments in markets to get our reputation a bit more stronger and more visible over all brands and newspapers and etcetera. In terms of technology is one of events that we did in terms of cloud and other kinds of tech. And talking about the trend over the year, keep in mind the next quarter we have the our main event of the year, the expert.

[Victor Mansur, Chief Financial Officer at XP]

So also another quarter if no people expenses that are higher than comparison quarter over quarter. Moving to tax rates, I think we talked a few opportunities that given the dynamic of the market and the product mix, if the market making activity and secondary market a bit more stronger than investment banking and broker dealer revenues, that our tax rate should be trading around 15% that was basically the case. Now we closed 14 something over the last twelve months. And if the product mix keep the way it is, that's the number that we may see, over the year.

[Arnon Shirazi, VP - Equity Research at Citi]

Thank you. But as related to offshore tax, the potential increase, what the thoughts?

[Victor Mansur, Chief Financial Officer at XP]

Okay, perfect. I think as any other financial institution in Brazil, there is a lot of ways to plan our tax structure and we are confident that the impact will be marginal in your business.

[Arnon Shirazi, VP - Equity Research at Citi]

Thank you.

[Executive]

Okay. Next question is from Neha Agarwal from HSBC. Neha, you may proceed.

[Neha Agarwala, SVP at HSBC]

Thank you for taking my question. Just once again, sorry to go back to this, but the corporate net new money was significantly weak versus what you saw in the seen in the previous quarters. I understand the volatility, but anything specific this quarter that led to this big decline compared to previous quarter? And should we expect more of that next quarter, or was this like a one off trend with some one off moves? And my second question is, you talked a bit about the the fee based model and that's only 5% of your AUC and that's been growing.

[Neha Agarwala, SVP at HSBC]

Can you talk a bit more about what impact we could see from that on your take rate, if any? Thank you.

[Victor Mansur, Chief Financial Officer at XP]

Okay. Thank you. Thank you, Neha. I will take the first one. I think the corporate dynamics a bit there what I said.

[Victor Mansur, Chief Financial Officer at XP]

If the banks that give credit to their clients keep asking for investments in terms of reciprocity, We may suffer a bit more in the 3Q and 4Q since we are not going to this business. But also it's important to remember that the ROA of this money is extremely low. So, the impacts in revenues to losing that money, they are not relevant. But it's very hard to predict what we are going to see over the next quarters. As you say, these are more volatile cash.

[Thiago Maffra, Chief Executive Officer at XP]

Hi, hi. This is Thiago. Thank you for your question. I will take the second part. When we think about fee based model, I believe there is an evolution about the model in Brazil.

[Thiago Maffra, Chief Executive Officer at XP]

If we get the, U. S. Market, for example, today, if you look in terms of AUC, it's seventy-thirty, but in terms of revenues, it's more like fifty-fifty, okay? In Brazil, as I mentioned, it's still very small, okay? But it's growing.

[Thiago Maffra, Chief Executive Officer at XP]

As I mentioned in the presentation, today, are prepared for to offer to our clients any kind of model, consultancy, fee based, IFA model, transactional based model. We can serve our clients in different ways and charge in different ways, okay? So we are Aguinoxchi, and we offer what's best for our clients. What we expect for the next years, as I mentioned at the beginning of the year, this year was to grow, I would say, from 3%, 4% to 7%, 8%, okay? So it's growing.

[Thiago Maffra, Chief Executive Officer at XP]

And but it's going to be a long journey here. It's not going to happen like from one day to the other, but we'll grow. And again, we are the best platform to offer all the models to our clients. And we believe being agnostic to models is a real differentiation to serve our clients better. But thinking about revenues, if you look only the take rate, it goes down a little bit, not a lot, but it goes down, okay?

[Thiago Maffra, Chief Executive Officer at XP]

But usually, it comes with a higher share of wallet. So usually, when we start to serve a client to a fee based model or to consolidation of funds outside of XP, usually, the AUC or the wallet or all the money that we oversee, if it's not 100% here, because today, we offer that model. We can consolidate what's outside of XP. Usually, you make more money or, I would say, equal money in terms of revenue because you increase the size of the wallet, okay? So I would say, if in the next quarters or years, we'll start to see, the take rate going a little bit down but at a very slow pace, but the share of wallet per client will increase and will compensate the lower take rate.

[Executive]

Okay. Next question is from Pedro Leduc, Itau BBA. Leduc, you may proceed.

[Pedro Leduc, Brazil Financials - Equity Research at Itaú BBA.]

Okay. Good evening, everyone. Thank you so much for the call and taking the question. I would like to explore the gross margin a little bit more, expand that Q on Q. When I try to look at the moving pieces here, IFA commission incentives get nicely diluted.

[Pedro Leduc, Brazil Financials - Equity Research at Itaú BBA.]

So I was trying to dig into this trend a little bit more, what drove it, if it was related to maybe the lower place of net new money or the mix of your revenue movements, so more equities, less fixed income. Just trying to get a sense of what is driving this gross margin expansion and how to think about it in the second half. Thank you.

[Victor Mansur, Chief Financial Officer at XP]

Leduc. Thank you for your question. I think here, first talking about some events. As we said before, the expected credit losses should be trading a bit lower than last quarter and that trend should remain like that around R9 million to R100 million dollars And the second point was a bit higher than average sales tax and that should go back to the average and not expect the number to go to be as high as that. And the margin should go as normalizing when you look in the last twelve months.

[Victor Mansur, Chief Financial Officer at XP]

Yes. And the channel mix is also important to mention. And as the internal sales force keep growing, but also that's a trend that you're going to see improving over, over, over quarters. But if you look at the last twelve months, that's the pace that should be expecting for the rest of the year.

[Yuri Fernandes, Executive Director at JP Morgan]

Thank you.

[Executive]

Okay. Next question is from Daniel Vaz from Banco Safra. Vaz, you may proceed.

[Tito Labarta, Vice President at Goldman Sachs]

Yes.

[Daniel Vaz, Lead Analyst - Equity Research at Safra National Bank]

In recent opportunities, you mentioned that the B2C productivity has been much stronger than the B2B. Right? So the B2C has been a large focus recently, and you standardized probably an approach for for selling and for the sales team. Right? So seems more well structured right now.

[Daniel Vaz, Lead Analyst - Equity Research at Safra National Bank]

When it comes to to the b two b, I think the productivity has deteriorated, like, over the years. So I wanna hear from you first if you're seeing net outflows from this channel from the B2B. And secondly, if you could tell us a bit your diagnostic right on the B2B channel if you need a higher focus right now to maybe refresh or review this model. So this has been in the press recently regarding M and As on the advisory offices, a lot of mandates. Would be good to hear from you the diagnostic. Thank you.

[Thiago Maffra, Chief Executive Officer at XP]

Thank you for the question. As we have said in the past, for us, it's not one channel or the other. We believe in having multiple channels for different reasons. When we look the B2B channel, the B2B channel specifically, as you mentioned, the productivity was very low. It's too low when compared like to two years ago, one years point or more ago.

[Thiago Maffra, Chief Executive Officer at XP]

But it's getting back. It's improving bit by bit. It's not going to change a lot from one quarter to the other, but it's improving. So everything that we have been done, a lot of efforts and energy that we have put on the channel since, last the end of last year, and more specifically, at the beginning of this year, it's paying off, and we are starting to see the performance of B2B channel, improving. So that's why we are confident on the BRL 20,000,000,000, okay?

[Daniel Vaz, Lead Analyst - Equity Research at Safra National Bank]

Okay. So just a follow-up. So you don't need a refresh or a review in this the way you operate in this model, right, as you did in the B2C?

[Thiago Maffra, Chief Executive Officer at XP]

It's just a normal evolution. You have like to evolve the model. We just announced back in on the B2B experience, big event that we do annually for the B2B channel. JZero was in Mendoza, and we announced some, chains on the way of serving clients. So I would say minimum standards of, serving our clients.

[Thiago Maffra, Chief Executive Officer at XP]

So allocation, number and ways, points of contact with the customers. And so I would say more like a franchisee model where we have minimal standards, and we just announced that like two months ago. So it's an evolution. It's not like a big change.

[Daniel Vaz, Lead Analyst - Equity Research at Safra National Bank]

Okay. Thank you.

[Executive]

Okay. We are at the time. So in name of the company, I'd like to thank you all for participating of our second quarter twenty twenty five earnings call. Any further questions will be more than welcome. Just look for the IR team and we keep in touch and see you soon. Thank you very much.

Participants

Executives

• Thiago Maffra, Chief Executive Officer
• Victor Mansur, Chief Financial Officer

Analysts

• Executive
• Eduardo Rosman, Analyst at BTG Pactual
• Yuri Fernandes, Executive Director at JP Morgan
• Thiago Batista, Executive Director at UBS Group
• Mario Pierry, Managing Director at Bank of America Merrill Lynch
• Marcelo Mizrahi, Equity Research - Head of Latam Banks & Financials at Bradesco BBI
• Tito Labarta, Vice President at Goldman Sachs
• Arnon Shirazi, VP - Equity Research at Citi
• Neha Agarwala, SVP at HSBC
• Pedro Leduc, Brazil Financials - Equity Research at Itaú BBA.
• Daniel Vaz, Lead Analyst - Equity Research at Safra National Bank