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XP (XP)
NASDAQ:XP
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XP
(NASDAQ:XP)
Rating:75Outperform
Price Target:
$23.00
▲(11.54%Upside)
Positive Factors
AUC Growth
Total AUC reached R$1,328 billion, up 8% q/q and 16% y/y, coming 5% above consensus.
Corporate & Issuer Services Revenue
Corporate & Issuer Services Revenue was R$599 million, up 9% quarter over quarter and 18% year over year, coming 10% above consensus and 6% above our estimate.
Net Inflows
Net inflows were R$23.5 billion, up 79% y/y, coming 7% above consensus.
Negative Factors
Recurring Net Income
Recurring net income was R$1,236 million, coming in 5% below consensus and our estimate.
Retail Revenue
Retail revenue was R$3,441 million, coming in 4% below consensus and 5% below our estimate.
Retail Revenue Yield
Retail net inflows declined 20%, with retail revenue yield deteriorating due to weaker mix and lower yield in equities.
XP (XP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.52B
Dividend Yield<0.01%
Average Volume (3M)7.27M
Price to Earnings (P/E)12.8
Beta (1Y)1.07
Revenue Growth-2.79%
EPS Growth1.33%
CountryUS
Employees6,834
SectorFinancial
Sector Strength79
IndustryFinancial - Capital Markets
Share Statistics
EPS (TTM)0.41
Shares Outstanding423,566,440
10 Day Avg. Volume6,567,793
30 Day Avg. Volume7,270,201
Financial Highlights & Ratios
PEG Ratio40.39
Price to Book (P/B)2.64
Price to Sales (P/S)0.00
P/FCF Ratio26.86
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$21.00Price Target Upside1.84% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
XP Business Overview & Revenue Model
Company DescriptionXP Inc. 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 Xpeed, 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, private equity, structured products, credit cards, loan operations, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.
How the Company Makes MoneyXP Inc. generates revenue primarily through the provision of brokerage services, asset management fees, and financial advisory services. The company earns commissions from trading activities conducted by its clients on various financial instruments, including stocks, bonds, and derivatives. Additionally, XP Inc. charges management fees for assets under management in its investment funds. The company also benefits from interest income on margin loans provided to customers for trading activities. Strategic partnerships with other financial institutions and technology providers further enhance its revenue streams, contributing to the company's overall earnings.
XP Earnings Call Summary
Earnings Call Date:May 20, 2025
(Q1-2025)
| % Change Since: 11.10%|
Next Earnings Date:Aug 19, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a strong performance in net income and ROE, along with growth in client assets and retail credit. However, challenges remain with lower-than-expected revenue growth and difficulties in the equity and issuer services segments.Q1-2025 Updates
Positive Updates
Record Net Income
Achieved the all-time high quarterly net income in the company's history, posting BRL1.236 million, representing a 20% year-over-year growth.
Strong ROE Performance
Achieved a 24.1% ROE during the quarter, with a 340 bps expansion versus the first quarter of ‘24.
Growth in Client Assets
Client Assets plus AUM and AUA achieved BRL1.8 trillion, posting a 13% growth year-over-year.
Retail Credit Growth
Retail credit NII posted 48% growth year-over-year, marking BRL82 million in revenues in the quarter.
Improved Efficiency Ratio
Achieved the lowest efficiency ratio in the company's history at 34.1%, lower by 204 basis points year-over-year.
Successful Share Buyback Program
Ended the previous share buyback program and announced a new one of BRL1 billion, part of the capital distribution plan.
Negative Updates
Gross Revenue Growth Below Guidance
Total gross revenues for the quarter reached BRL4.6 billion, representing a 7% increase year-over-year, below the guidance of at least 10% growth for the year.
Issuer Services Revenue Decline
Issuer Services delivered flattish revenues year-over-year, marking BRL282 million and a decrease of 16% quarter-over-quarter.
Equity Market Challenges
Equities have been a drag on retail revenues with lower average trading volume at B3 impacting negatively.
Company Guidance
During the First Quarter 2025 Earnings Call, the company reported significant financial metrics, demonstrating robust growth and strategic execution. Client Assets, including AUM and AUA, reached BRL1.8 trillion, marking a 13% year-over-year growth. The active client base expanded to 4.7 million, a 2% increase from the previous year. Gross revenues for the quarter were BRL4.6 billion, showing a 7% growth year-over-year, while ABG grew by 16% year-over-year to BRL1.3 billion. The company achieved a record-high quarterly net income of BRL1.236 million, a 20% increase year-over-year. ROE was reported at 24.1%, expanding by 340 basis points compared to the first quarter of 2024. The capital ratio was comfortably positioned at 19%, with a 130 basis point increase quarter-over-quarter. Additionally, diluted EPS grew by 24% year-over-year, outpacing net income growth, attributed to the execution of a share buyback program. The company also recorded BRL24 billion in net new money, a 79% year-over-year increase, and maintained a retail net new money target of around BRL20 billion per quarter, achieving a 54% growth year-over-year.XP Financial Statement Overview
Summary
XP's financials demonstrate strong growth with significant revenue and margin improvements driven by operational efficiencies. The balance sheet shows prudent leverage management and robust equity returns. Cash flow statements highlight strong cash generation and effective capital management, positioning XP well for future opportunities.Income Statement
XP has demonstrated strong revenue growth with a notable increase from $6.53 billion in 2023 to $16.25 billion in 2024. The gross profit margin in 2024 stands at 100%, indicating efficient cost management, though this is due to total revenue equaling gross profit. The net profit margin improved significantly to 27.78% in 2024, from 59.66% in 2023, due to increased revenue despite higher net income in 2023. EBIT margin improved substantially from a negative margin in prior years to 60.94% in 2024, demonstrating improved operational efficiency.82
Very Positive
Balance Sheet
XP's balance sheet reflects a healthy equity ratio of 5.77% in 2024, indicating a conservative leverage profile, although lower than previous years. The debt-to-equity ratio improved to 1.36 from 1.83 in 2023, showcasing better leverage management. Return on equity improved to 22.53% in 2024 from 20.04% in 2023, reflecting strong equity utilization despite the volatile financial environment.75
Positive
Cash Flow
The operating cash flow to net income ratio remains robust at 2.48 in 2024, indicating strong cash-generating ability compared to profits. Free cash flow growth is significant, increasing from $7.93 billion in 2023 to $11.03 billion in 2024, highlighting improved cash management. The free cash flow to net income ratio is solid at 2.44, reflecting efficient conversion of profits into free cash flow.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.42B | 6.53B | 5.94B | 6.20B | 5.02B | Gross Profit |
| 1.89B | 1.62B | 1.10B | 2.06B | 1.52B | EBIT |
| -3.92B | -3.86B | -3.56B | -1.93B | -615.31M | EBITDA |
| 6.03B | 4.81B | 4.05B | 4.18B | 2.62B | Net Income Common Stockholders |
| 4.51B | 3.90B | 3.58B | 3.59B | 2.08B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 74.91B | 54.41B | 41.30B | 36.22B | 22.05B | Total Assets |
| 347.46B | 249.04B | 192.03B | 139.34B | 96.03B | Total Debt |
| 115.13B | 68.56B | 35.52B | 28.21B | 32.12B | Net Debt |
| 109.52B | 64.62B | 31.97B | 25.72B | 30.17B | Total Liabilities |
| 327.41B | 229.59B | 174.99B | 124.92B | 85.13B | Stockholders Equity |
| 20.04B | 19.45B | 17.04B | 14.42B | 10.89B |
| Cash Flow | Free Cash Flow | |||
| 10.85B | 7.93B | 1.68B | -4.37B | 1.22B | Operating Cash Flow |
| 11.18B | 8.13B | 1.80B | -4.02B | 1.51B | Investing Cash Flow |
| -1.67B | 538.81M | -371.28M | -1.15B | -582.01M | Financing Cash Flow |
| -5.78B | -4.39B | -200.30M | 6.64B | 788.71M |
XP Technical Analysis
Positive
20.62
Price Trends
16.71
Positive
15.47
Positive
15.45
Positive
Market Momentum
0.89
Positive
77.70
Negative
68.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XP, the sentiment is Positive. The current price of 20.62 is above the 20-day moving average (MA) of 19.24, above the 50-day MA of 16.71, and above the 200-day MA of 15.45, indicating a bullish trend. The MACD of 0.89 indicates Positive momentum. The RSI at 77.70 is Negative, neither overbought nor oversold. The STOCH value of 68.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for XP.
XP Risk Analysis
XP disclosed 83 risk factors in its most recent earnings report. XP reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
XP Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $6.15B | 11.51 | 23.87% | 2.41% | 26.02% | 142.79% | |
75 Outperform | $10.52B | 12.76 | 21.71% | <0.01% | -2.79% | 1.33% | |
75 Outperform | $8.42B | 38.98 | 16.25% | 1.35% | 7.22% | -15.53% | |
69 Neutral | $9.92B | 18.40 | 11.48% | 1.91% | 12.85% | 20.21% | |
67 Neutral | $10.87B | 18.26 | 6.38% | 3.04% | 16.62% | 139.24% | |
67 Neutral | $9.24B | 27.37 | 28.10% | ― | 47.17% | 0.09% | |
64 Neutral | $12.85B | 9.81 | 7.79% | 78.20% | 12.23% | -7.93% |
* Financial Sector Average
Performance Comparison
XP
XP
20.62
4.09
24.74%
JEF
Jefferies
53.49
10.63
24.80%
MKTX
Marketaxess Holdings
225.02
28.35
14.42%
SF
Stifel Financial
96.68
18.98
24.43%
VIRT
Virtu Financial
40.73
17.87
78.17%
FRHC
Freedom Holding
146.25
69.24
89.91%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.