XP Inc. (NASDAQ:XP) Q1 2023 Earnings Conference Call May 15, 2023 5:00 PM ET

Company Participants

Andre Martins - Head of IR

Thiago Maffra - CEO

Bruno Constantino - CFO

Conference Call Participants

Tito Labarta - Goldman Sachs

Mario Pierry - BofA Global Research

Geoff Elliott - Autonomous Research

Olavo Arthuzo - UBS

Neha Agarwala - HSBC

Marcelo Telles - Credit Suisse

Andre Martins

Good afternoon, and welcome to XP Inc.'s First Quarter 2023 Earnings Call. I'm Andre Martins, Head of Investor Relations. And with me are our CEO, Thiago Maffra; and our CFO, Bruno Constantino, who will be available for the Q&A section.

I kindly ask you to refer to the legal disclaimer section on the beginning of our presentation about forward-looking statements. Additional information on forward-looking statements can be found on the SEC filings section of our website. It's important to remind that this call has a translation option to Portuguese. And the participants who want to ask questions may raise their hands on the Zoom tool.

Now I'll pass over to Thiago Maffra, who will deliver the opening remarks.

Thiago Maffra

Good afternoon, and thank you all for joining us today. I want to begin today's call with a few comments about the first quarter, our outlook for 2023 and our longer-term positioning. Then I will turn it over to our CFO Bruno, who will present Q1 results in more detail.

So let's start with our quarterly performance. As you all know, the macroeconomic outlook remains challenging. In Brazil, we continue to face a high interest rate environment similar to other economies around the world. In addition, a large Brazilian corporate filed for bankruptcy in the quarter causing important loss for its investors, creditors and bondholders.

As a result, capital markets and corporate credit remain under pressure, which has impacted the financial advisor exchange since many investors are keeping their savings in liquid, low-risk products, while they wait for this scenario to improve. While this headwinds has too impacted our core business in the first quarter, we keep advancing in our long-term journey in getting closer to the 1 trillion client assets milestone, having ended Q1 with BRL954 billion. Additionally, our ecosystem continues to grow with the net addition of 89,000 clients and 688 financial advertisers.

On the financials, excluding the one-time loss, our gross revenue expanded 7% year-over-year, while EBT and net income grew 14% and 8% year-over-year. While these adjusted numbers look better, these are still not the growth rates that we are used to and which we believe we will see again when the macro environment improves. However, when we look at our first quarter performance, I see positive signs of strength and resilience in our business model, as well as efficiencies from our cost structure improvement.