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XP Inc. Reports 4Q20 Financial Results

SÃO PAULO, Brazil–(BUSINESS WIRE)–XP Inc. (NASDAQ:XP) (“XP” or the “Company”), a leading tech-enabled platform and a trusted pioneer in providing low-fee financial products and services in Brazil, today reported its financial results for the fourth quarter of 2020 and for the year ended December 31, 2020.

To our shareholders:

The events of 2020 were certainly demanding for all of us around the world. Faced with a pandemic of unimaginable proportions, we collectively became more resilient, supportive, flexible and aware that nothing can be taken for granted. Amid the catastrophic health crisis and the reality of quarantine, we reflected and reviewed the way we relate to our family, work, routine and old habits. After many challenges, we remain confident that better days are ahead.

2020 marked XP Inc.’s first as a publicly traded company, which presented new challenges in internal and external communications, governance and strategy. We have, undeniably become a better and more prepared company for the future since our IPO in December 2019.

I am convinced that our culture, which I consider our greatest asset and a key long-term competitive advantage, has been tested, strengthened and, without a doubt, was the main factor in successfully navigating this turbulent period and driving robust growth.

I want to reinforce our values that we believe will allow all our employees to help transform the financial markets in Brazil and improve peoples’ lives over time:

Dream Big – to continue to believe in “impossible” projects and build the bridges to make them possible.

Open Mind – to never forget that there are no absolute truths, that mistakes are part of the journey and that great ideas and projects often come from where and when you least expect them.

Entrepreneurial Spirit – to turn employees into owners of the company, with responsibilities to maintain the company’s competitive and ethical standards, and free from hierarchical limitations.

After 2020, I am convinced that the result of our values in practice is greater than the sum of the three separate parts, and I would like to share some concrete examples of how we have evolved during the year.

Almost twelve months ago, at the beginning of the crisis, we experienced an unprecedented increase in trading volumes across our platforms. This allowed us to solve operational bottlenecks and anticipate investments in technology to guarantee the availability and robustness of services for our customers. We are proud of the improvements we have achieved in a short period of time, which have resulted in expanded capacity to manage new levels of demand. Even more remarkable is the fact that the entire team working on this has been working from home and, therefore, with a greater need for creativity, intensity and strong communication.

We have also made significant progress on our ESG initiatives, accelerated by the pandemic that severely impacted the most disadvantaged part of the population in our country. We created the “Juntos Transformamos” movement, with the goal of delivering food and medical equipment quickly and effectively to the people who need it most, serving approximately 500,000 people thus far. Going forward, we are committed to leading by example and seeking to leave a better country for future generations. We created our ESG board and will strive to become an ESG reference, generating relevant and long-term impacts on society. Rest assured that this will be a recurring theme in our communications and one of our key priorities for years to come.

Additionally, during 2020 we learned new ways to work as a team without necessarily being together physically. As a result, the XP Anywhere concept was born – permanent adoption of the flexible work model – as well as the Villa XP project, a sustainable and innovative space for XP employees, partners and clients. These initiatives will provide a better quality of life for our employees and their families, avoiding traffic and large displacements, allowing them to live outside large corporate centers and consequently enhancing commitment and performance. Also, we improved our ability to attract talent in Brazil and around the world and significantly lower our cost structure, which will drive significant benefits in terms of efficiency and long-term profitability.

Throughout last year, we experienced significant digital acceleration. In this context, we revisited our long-term strategic planning and the pace with which we intend to address new markets and target new customers. The expected launches of our digital bank and credit card business, along with our recently available collateralized loan products, will enhance customer experience and drive expanded relationships.

In terms of operating and financial results, we had the best year in our history. We generated gross revenue of R$8.7 billion, an increase of 58% Y-o-Y. Our Adjusted Net Income totaled R$2.3 billion, an increase of 111% Y-o-Y. Despite our accelerated growth, it is important to highlight the size of the market opportunity across the Brazilian financial system. The total revenue pool across the Brazilian financial system represents over R$770 billion, which today equates to almost 90 times the size of XP Inc.’s revenue. Our existing footprint currently addresses roughly 20% of total financial revenue in Brazil. Our plans include TAM expansion throughout our journey, always focused on maintaining our asset-light business model and leveraging the evolution of the capital markets as a lever for growth.

As we have always done throughout our history, we have grown our company by connecting dots and picking low-hanging fruits, with a focus on profitability, execution and the experience of our clients, adding new businesses gradually and consistently. It is always important to remember that back in 2008 we were a brokerage firm that offered only one product (stocks) for only one customer profile (individuals). Since then, we have built a dynamic ecosystem in terms of products and experiences encompassing multiple agents. We remain in the early stages of our journey, and we believe the growth we have achieved so far will be surpassed by what is yet to come.

Finally, I would like to thank all market participants for the partnership and interactions throughout our first year as a listed company and reinforce my commitment and that of my partners to drive long-term value for shareholders. We are more motivated and energized than ever to build a legacy, inspire our country and contribute to the development of the Brazilian financial system across verticals.

Guilherme Benchimol, CEO


4Q20 KPIs

  • TOTAL AUC: R$660 Billion (+61% YoY)
  • ACTIVE CLIENTS: 2.8 million (+63% YoY)
  • NPS: 71
  • GROSS REVENUE: R$2.6 Billion (+41% YoY)
  • ADJUSTED EBITDA: R$891 Million (+42% YoY)
  • ADJUSTED NET INCOME: R$721 Million (+73% YoY)

2020 KPIs

  • GROSS REVENUE: R$8.7 Billion (+58% YoY)
  • ADJUSTED EBITDA: R$2.9 Billion (35.8% Margin)
  • ADJUSTED NET INCOME: R$2.3 Billion (27.8% Margin)

Key Business Metrics

















Operating and Financial Metrics (unaudited)  
















AUC (in R$ bn)  
















Active clients (in ‘000s)  
















Retail – gross total revenues (in R$ mn)  
















Institutional – gross total revenues (in R$ mn)  
















Issuer Services – gross total revenues (in R$ mn)  
















Digital Content – gross total revenues (in R$ mn)  
















Other – gross total revenues (in R$ mn)  
















Company Financial Metrics  
















Gross revenue (in R$ mn)  
















Net Revenue (in R$ mn)  
















Gross Profit (in R$ mn)  
















Gross Margin  





-612 bps




-132 bps






-181 bps

Adjusted EBITDA1 (in R$ mn)  
















Adjusted EBITDA margin  





11 bps




258 bps






305 bps

Adjusted Net Income1 (in R$ mn)  
















Adjusted Net Margin  





544 bps




294 bps






691 bps


¹ See appendix for a reconciliation of Adjusted Net Income and Adjusted EBITDA.

Operational Performance

Assets Under Custody (in R$ billions)

Total AUC reached R$660 billion on December 31, up 61% year-over-year and 17% quarter-over-quarter. Year-over-year growth was driven by R$198 billion of net inflows and R$53 billion of market appreciation. Despite last year’s uncertainty and market volatility, XP delivered solid AUC growth, while continuing to strengthen brand recognition among Brazilian investors.

Net Inflows (in R$ billions)

Adjusted Net Inflow totaled R$37 billion in 4Q20, stable relative to 3Q20. The average monthly Net Inflow, adjusted for extraordinary equity inflows/outflows, was R$12.7 billion in 2H20, up 17% from R$10.8 billion in 1H20. For 4Q20, flows were strong across all channels and brands, led by the Private segment reflecting ongoing cross-selling opportunities across XP’s ecosystem.

Active Clients (in 000’s)

Active clients grew 63% and 5% in 4Q20 vs 4Q19 and 3Q20, respectively. In 2020, client growth was strong across channels, with XP Direct outpacing the IFA channel, and Rico accelerating in 4Q20 following the elimination of brokerage fees in September.

Retail Equity DARTs¹ (million trades)

¹Daily Average Revenue Trades, including Stocks, REITs, Options and Futures

Retail DARTs have held strong since 2Q20 with 2.6 million daily average trades in 4Q20 despite a typical seasonal slowdown in December due to the holiday season. Retail DARTs at Rico reached a record level in 4Q20 following the implementation of zero brokerage fees in September.

Collateralized Credit Portfolio (in R$ millions)

Our Credit portfolio reached R$3.9 billion of assets as of December 31, 2020, which represented 0.6% of our total AUC. Demand was driven by both individuals and SMB clients, boosted by XP’s AUC growth and the Government’s decision to charge zero IOF (Tax on Financial Operations) on loans granted over the last two weeks of the year.

The average duration of our credit book was 3.2 years, with a 90-day Non-Performing Loan (NPL) ratio of 0.0% at year-end. Furthermore, we highlight the asset-light nature of our loan book, which currently represents R$721 million of Risk-Weighted Assets and requires minimum regulatory capital of just R$58 million.

The fact that most of our credit portfolio is collateralized minimizes capital needs for growth. Our book is mainly funded by the issuance of Structured Notes (COEs) and Deposits, which are distributed to clients on our platform.

Net Promoter Score (NPS)

Our NPS, a widely known survey methodology used to measure customer satisfaction, increased to 71 in December 2020. Maintaining a high NPS score is a priority for XP since our business model is built around the client experience. The NPS calculation as of a given date reflects the average scores in the prior six months.

Total Gross Revenue (in R$ millions)

Total Gross Revenue increased 41% from R$1.8 billion in 4Q19 to R$2.6 billion in 4Q20. For the year, gross revenue expanded 58% to R$8.7 billion in 2020 from R$5.5 billion in 2019. The increase was mainly driven by strong growth in the Retail business, which contributed 92% and 81% of the growth in 4Q20 and 2020, respectively.


Retail Revenue (in R$ millions)

4Q20 vs 4Q19

Retail revenue grew 60% from R$1.2 billion in 4Q19 to R$1.8 billion in 4Q20. The main growth drivers included, in order of contribution: (1) Equities and Futures, reflecting resilient trading volumes and growing participation of retail investors at B3; (2) Financial Products, represented by Structured Notes (COE) and equity-linked derivatives; and (3) Fixed Income.

In 4Q20, Retail-related revenues represented 75% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement, and were composed of Derivatives with Retail Clients, Fixed Income secondary transactions, and Floating, among others.

2020 vs 2019

Retail revenue totaled R$6.3 billion in 2020, a 71% increase compared to 2019, and contributing 81% of total revenue growth, mainly driven by platform growth, both in AUC and Active Clients. For 2020, Equities and Futures, Financial Products, and Fixed Income were also the main growth drivers, in order of contribution.

LTM Take Rate (LTM Retail Revenue / Average AUC)

4Q20 take rate (for the last twelve months) remained stable compared to 4Q19. Despite the strong growth in AUC during the period, higher Equities and Futures’ trading volumes and rising distribution of Financial Products and securities through Capital Markets worked as an offset.

Note: LTM Take Rate (LTM Retail Revenue / Average AUC). Average AUC = (Sum of AUC from beginning of period and each quarter end in a given year, being 5 data points in one year)/5


Institutional Revenue (in R$ millions)

4Q20 vs 4Q19

Institutional gross revenue remained stable in 4Q20, since 4Q19 had strong performance fees from funds, which offset a higher equity trading volume in 4Q20.

In 4Q20, Institutional revenue accounted for 16% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement, and was composed mostly of Fixed Income secondary transactions and Derivatives, among others.

2020 vs 2019

Compared to 2019, Institutional revenue grew 51%, from R$802 million to R$1.2 billion, driven by market activity benefiting both fixed income and equity trading volume.

Issuer Services

Issuer Services Revenue (in R$ millions)

4Q20 vs 4Q19

Issuer Services revenue expanded 46% year-over-year from R$221 million in 4Q19 to R$323 million in 4Q20. This increase was driven by (1) Equity Capital Markets (ECM), with 11 executed deals vs 8 in 4Q19, and (2) our Debt Capital Markets (DCM) division, with participation in 55 deals vs 51 in 4Q19.

2020 vs 2019

Issuer Services revenue grew 36% year-over-year, from R$507 million in 2019 to R$688 million in 2020, despite modest activity in 2Q20 due to overall market conditions. The increase was mainly attributable to (1) Equity Capital Markets (ECM), with 32 executed deals vs 13 in 2019 and (2) and Debt Capital Markets (DCM) division, with 147 deals vs 145 in 2019.

In 2020, XP Investment Banking was a protagonist in capital markets, ranked #1 in the distribution of (1) Fixed Income & Hybrid products (consolidated), (2) REITs distribution, and (3) in CRA (agribusiness certificate of receivable), participating in 25%, 56%, and 46% of total deals, respectively.

Digital Content and Other

Digital Content Revenue

Gross revenue totaled R$25 million in 4Q20, down 15% from R$30 million in 4Q19. When looking at full-year figures, Digital content had a solid year, growing revenues 16% over 2019. 4Q20 was impacted mostly by the absence of in-person events and courses compared to the same period of last year.

Other Revenue

4Q20 vs 4Q19

Other revenue decreased 36% in 4Q20 vs. 4Q19, from R$111 million to R$71 million, primarily driven by a lower average Selic rate.

In 4Q20, other revenue accounted for 9% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement, composed mostly of interest on adjusted gross cash and a small portion related to our treasury’s asset liability management.

2020 vs 2019

Other revenue remained stable for the full-year comparison, impacted by a lower average Selic rate, offset by an increase in the average adjusted gross cash balance during the year.


COGS (in R$ millions) and Gross Margin

4Q20 vs 4Q19

COGS rose 72% from R$487 million in 4Q19 to R$836 million in 4Q20, reducing gross margin from 71.2% to 65.1%, driven by an (i) 306 bps compression caused by long-term incentive plans to our IFAs, from which 182 bps are related to share-based compensation; and (ii) 259 bps from product mix.

2020 vs 2019

For the year, COGS rose 68%, from R$1.6 billion to R$2.7 billion, driven by the increase in revenues from our IFA Network and active clients. Gross profit margin decreased 181 bps, also affected by the investments made in the IFA network in the second half of 2020.

SG&A Expenses

SG&A Expense (ex-Share-Based Compensation) (in R$ millions)

4Q20 vs 4Q19

SG&A expenses (excluding share-based compensation) totaled R$717 million in 4Q20, up 20% from R$599 million in 4Q19. Expenses, as a percentage of net revenue, decreased, even though we are significantly growing our headcount (over 50% year-over-year) and being consistently developing our product offering and client experience to address an even greater addressable market. The efficiency gain in SG&A was allowed by past investments in technology and our highly scalable platform business model.

2020 vs 2019

SG&A expenses (excluding share-based compensation) for the full-year of 2020 totaled R$2.6 billion, an increase of 44% over R$1.8 billion from 2019. The efficiency gain, as mentioned above, is mostly related to our highly scalable business model, even considering investments to jump into a greater addressable market.

Share-Based Compensation (in R$ millions)

In December 2019, we implemented our new partnership model, according to which existing or new partners may be entitled to share-based compensation based on cultural fit and individual performance, consisting of restricted stock units and performance share units. Expenses related to this model were significantly higher in 2020. As of December 2020, there was a total of 13,899,648 outstanding shares, or approximately 50% of the total dilution planned and approved during IPO, on December 19.

In 2020, we have anticipated a significant part of the approved dilution, and, for this reason, this increase should not be repeated at the same pace in new grants. We expect to use the approved dilution as originally planned: within five years counting from IPO. A portion of Share-Based Compensation is related to IFAs and allocated in COGS.

Adjusted EBITDA

Adjusted EBITDA¹ (in R$ millions) and Margin

¹ See appendix for a reconciliation of Adjusted EBITDA.

4Q20 vs 4Q19

Adjusted EBITDA grew 42%, from R$627 million to R$891 million. The growth was driven by (1) strong growth in Retail Revenue and (2) operating leverage in SG&A. Both were partially offset by higher COGS, impacted by investments made in our IFA Network.

2020 vs 2019

Compared to 2019, Adjusted EBITDA expanded 74%, from R$1.7 billion to R$2.9 billion. Despite (1) growing our number of employees 50% year-over-year, (2) investing in new business (such as credit cards and digital bank), and (3) investing in our IFA Network, adjusted EBITDA Margin expanded from 32.7% to 35.8%. The margin expansion reflects the benefits of our operating leverage and technology investments made in the past, which provided scalability for the company.

Adjusted Net Income

Adjusted Net Income¹ (in R$ millions) and Margin

4Q20 vs 4Q19

Adjusted Net Income grew 73%, from R$417 million to R$721 million, driven by (1) strong performance of the Retail business and (2) a lower effective tax rate, as a result of our post-IPO corporate structure. Our adjusted net income margin expanded by 544 bps in 4Q20.

2020 vs 2019

In 2020, Adjusted Net Income grew 111% vs 2019 and reached R$2.3 billion. The adjusted net margin expanded from 20.9% in 2019 to 27.8% in 2020, up 691 bps, reflecting: (1) strong growth in Retail Revenue, which was mainly driven by Equity, Derivatives, Financial Products and Fixed Income, (2) a lower effective tax rate; and (3) operating leverage in SG&A.

¹ See appendix for a reconciliation of Adjusted Net Income.


We have revised our 3-5 year adjusted net margin guidance, from previous 18-22% range to 24-30%.

Cash flow (in R$ millions)





  FY20   FY19
Cash Flow Data                
Income before income tax   








Adjustments to reconcile income before income tax   








Income tax paid  








Contingencies paid  








Interest paid  








Changes in working capital assets and liabilities   








Adjusted net cash flow (used in) from operating activities   








Net cash flow (used in) from securities, repos, derivatives and banking activities  








Net cash flows from operating activities   








Net cash flows from investing activities   








Net cash flows from financing activities   








Net Cash Flow Used in Operating Activities

Our net cash flow used in Operating activities represented by Adjusted net cash flow (used in) from operating activities (which in management’s view is a more useful metric to track the intrinsic cash flow generation of the business) increased to R$1.6 billion for 4Q20 from negative R$129 million in 3Q20, and increased from R$1.4 billion in 2019 to R$3.0 billion in 2020 driven by:

  • Higher balance of securities and derivatives that we hold in the ordinary course of our business as a Retail investment distribution platform and as an Institutional broker-dealer (concerning the sale of fixed income securities and structured notes);
  • Our strategy to allocate excess cash and cash equivalents from treasury funds, from Floating Balances and private pension balances to securities and other financial assets. These balances may fluctuate substantially from quarter to quarter and were the key drivers to the net cash flow from operating activities figures;
  • Increases in our banking activities from loan operations, deposits mainly derived from time deposits, structured operations certificates (COE) and other financial liabilities which include financial bills as a result of our expected growth in new financial services verticals.
  • Growth of our omnichannel distribution network through our network of IFA partners;
  • Our income before tax of R$892 million in 4Q20 and R$3.0 billion in 2020 combined with non-cash expenses consisting primarily of (i) share-based plan of R$154 million in 4Q20 and R$233 million in 2020 (ii) depreciation and amortization of R$37 million in 4Q20 and R$143 million in 2020, (iii) Losses on impairment and write-off of property, equipment, intangible assets and leases of R$11 million in 4Q20 and R$73 million in 2020. The total amount of adjustments to reconcile income before income taxes for 4Q20 was R$229 million and R$564 million for 2020.

Net Cash Flow Used in Investing Activities

Our net cash used in investing activities decreased from R$302 million in 3Q20 to R$202 million in 4Q20 and increased from R$161 million in 2019 to R$582 million in 2020, primarily affected by:

  • Our acquisitions of FinTech’s investments in associates and joint ventures of R$290 million in 2020;
  • the investment in intangible assets, mostly IT infrastructure and capitalized software development which increased from R$35 million in 3Q20 to R$66 million in 4Q20 and from R$89 million in 2019 to R$145 million in 2020.

Net Cash Provided by Financing Activities

Our net cash flows from financing activities increased from negative R$478 million in 3Q20 to R$1.4 billion in 4Q20 and decreased from R$4.2 billion in 2019 to R$789 million in 2020, primarily due to:

  • R$1.4 billion related to proceeds from the issuance of shares related to our primary offering in 4Q20;
  • R$400 million related to principal payments of the first series of non-convertible debentures in 3Q20;
  • R$66 million related to a partial repurchase of the second series of non-convertib


Investor Relations Team
André Martins
Antonio Guimarães
Natali Pimenta

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