XP Inc. Reports Fourth Quarter 2024 Results

SÃfO PAULO--(BUSINESS WIRE)--February 18, 2025-- 

XP Inc. $(XP)$ ("XP" or the "Company"), a leading tech-enabled platform and a trusted pioneer in providing low-fee financial products and services in Brazil, reported today its financial results for the fourth quarter of 2024.

To our shareholders,

As we close out 2024, I want to begin this message by expressing my gratitude to all our clients, employees, and investors for the trust you have placed in XP Inc. over another year. We all know that this was a period marked by economic challenges, but as an entrepreneurial and resilient company, we faced each of them with the certainty that we were doing what was necessary to evolve in all aspects. Just as we have transformed the financial market over the past two decades with a strong and unique culture, I believe that this remains one of our greatest competitive advantages as we continue to challenge the status quo and lead the changes we want to see in the future.

I am proud to say that we have innovated by democratizing access to high-quality investment products and providing exclusive advisory services to Brazilian investors. Now, we want to go even further and are starting a new revolution in how Brazilians manage their financial lives. Our holistic financial planning approach considers much more than just investments. We aim to help our clients plan for their short- and long-term future, succession, tax structuring, and all financial needs throughout different life stages. This is how we envision our next steps--by delivering the best and most customized advisory and service experience. And our achievements and progress throughout 2024 show that we have advanced on this path, utilizing the full strength of our ecosystem.

As we continue down this path, I can assure you that we remain-- and will continue to remain--focused on sustainable and long-term value creation for our shareholders, clients, and partners. Through disciplined execution and intensity, we have strengthened our competitive position, delivered solid revenue and profit growth, while maintaining our DNA of operational efficiency and cost control.

Highlights 2024

This year, we delivered solid operational results, growing our key performance indicators. We closed 2024 with a 9% increase in Client Assets, reaching R$1.2 trillion, and reinforced our leadership as the largest and most qualified investment advisory network in Brazil, with 18 thousand advisors. Our revenues grew by 15%, reaching R$18 billion, and our adjusted net income increased by 17%, reaching R$4.5 billion, driven by a record efficiency ratio of 34.7%. All the figures mentioned above are historical records, achieved in a year of significant macroeconomic volatility, demonstrating that our strategies for diversifying results through new services and products have made us much more resilient.

Strategy

The strategic decisions made in recent years have transformed XP. I am convinced that today we are a much more prepared, efficient, and capable company, ready to fulfill our mission and deliver sustainable long-term growth. Our strategy is clear and focused on three key pillars, all centered on a culture of quality, resulting in the creation of a company that provides premium financial services, at scale, to our clients.

1. Leadership in Core Business To achieve market leadership--our primary objective--we must maintain and expand our competitive advantages, allowing us to continue growing across different investor segments. Within this strategic pillar, our key focus areas are:

A Differentiated Product Platform

We have made continuous investments in our investment platform, with a strong focus on technology and innovation. In 2024, this became even more evident. Our commitment to modernizing our fixed-income platform resulted in the launch of new liquidity products and private credit solutions, replicating banks' ability to offer tax-exempt with daily liquidity products. These initiatives have driven daily fixed-income trades to approximately 40 thousand, representing a 38% CAGR since 2020, positioning us as an increasingly unique market maker in Brazil.

Expansion and Diversification of Distribution Channels

Our distribution ecosystem is now larger, more sophisticated, and equipped with cutting-edge technology. Since 2020, we have developed three new distribution channels--Internal Advisory, Wealth Managers, and RIAs--which have gained relevance and are beginning to show significant returns.

We ended 2024 with nearly 3,000 internal advisors and solidified our leadership in the Wealth Services segment (Wealth Managers and RIAs)--a highly scalable, technology-driven business. The quality of our offering is an unmatched differentiator in the market. As a result of these advances, approximately 60% of our retail net inflows in 2024 came from these new channels, highlighting our ability to grow and diversify revenue streams.

Smart Segmentation and Operational Efficiency

We redesigned our client segmentation framework, aligning different customer profiles with tailored service models across four key dimensions: advisory model, investment product offering, banking products, and post-sale support.

Additionally, by better aligning value propositions with specific customer segments, we have also been able to optimize serving costs, which should lead to higher margins in the future. We are just beginning to reap the benefits of this new structure, but its importance in driving market share expansion across diverse customer segments is already clear.

In this context, it is worth highlighting our Private segment, where we have made significant investments in recent years and are now starting to see the results. While segmentation played a key role in this progress, there is still a significant opportunity to unlock further potential. Today, our Private segment already outperforms in net inflows and client satisfaction compared to previous years. We are encouraged by the results of recent months and are confident in an excellent 2025.

High-Value-Added Services

Segmentation also plays a key role in how we serve different client profiles. We have customized our value proposition to different needs: retail clients receive advisory services, high-net-worth clients have access to Financial Planning, and Private clients benefit from Wealth Planning.

Financial Planning is a fundamental pillar of our strategy. XP is the only institution in Brazil to offer a comprehensive Financial Planning solution for clients with assets above R$300,000. This differentiation not only enhances client satisfaction but also increases platform loyalty.

Initial results have been extremely positive. Clients utilizing Financial Planning demonstrate higher engagement, with twice the conversion rate in insurance purchases, an increase in retirement plans conversion rate from 30% to 41%, and net inflows that are 43% higher than those who do not use the service. We are at the beginning of a new wave of transformation in the market--and we will continue to lead it.

2. Retail Cross-Sell Starting from our clients' needs, we will expand our offer to serve their complete financial needs, aiming to break the link of investors with the incumbent banks once and for all.

The growth of our offering beyond investments has been a key pillar of this strategy. Today, between 15% and 20% of our revenue comes from non-investment-related products, boosting share of wallet, customer satisfaction (NPS), and reducing churn. Despite these advances, penetration of these products remains relatively low within our client base, reinforcing our confidence in accelerated growth potential for the coming years.

3. Wholesale We want to fully explore the synergy of a Wholesale Bank offer with the investment universe, deepening our relationship with the main economic groups in Brazil.

Our wholesale strategy is evolving rapidly, replicating the successful model we built in retail, now tailored to serve Middle Market and large corporate clients. Our competitive advantage lies in the combination of high-quality products and a differentiated service model, where we excel in quality, agility, client proximity, and cost-efficient service.

Unlike traditional banks, our model is less capital-intensive. We do not aim to accumulate assets but rather leverage our unique distribution capabilities to serve companies more efficiently. This approach allows us to operate with a higher payout ratio and ROE than industry standards, consolidating XP as an innovative alternative in the Wholesale Banking space.

Profitability Growth and New Corporate Structure

Throughout 2024, we communicated our progress on our corporate reorganization, which was concluded in November 2024. This new structure enhances our ability to deliver sustainable capital returns to our shareholders, leveraging the increased funding efficiency and higher leverage potential of Banco XP, which benefits both our Retail and Wholesale businesses.

In 2024, we distributed 74% of our net income through dividends and share buybacks, maintaining a disciplined approach that balances capital returns with reinvestment opportunities for future growth.

Looking ahead, EPS growth and ROE expansion will be key indicators of value creation for our shareholders. We expect EPS to grow at a faster rate than net income in the coming years, primarily driven by our ongoing share repurchase programs.

Additionally, we believe that our current ROE does not yet reflect the full return on our marginally deployed capital. We continue to operate with excess capital, and we are still in the early stages of expanding our margins toward the levels outlined in our 2026 guidance.

Outlook for 2025

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February 18, 2025 16:37 ET (21:37 GMT)