Slide 1: 4Q20 Earnings Presentation
1 4Q20 Earnings Presentation
Slide 2: Important Disclosure
2 Important Disclosure IN REVIEWING THE INFORMATION CONTAINED IN THIS PRESENTATION, YOU ARE AGREEING TO ABIDE BY THE TERMS OF THIS DISCLAIMER . THIS INFORMATION IS BEING MADE AVAILABLE TO EACH RECIPIENT SOLELY FOR ITS INFORMATION AND IS SUBJECT TO AMENDMENT . This presentation is prepared by XP Inc
Slide 3: Index
3 Index Strategy Update 02 4Q20 KPIs and Financials 03 Guidance 04 01 Opening Remarks Q&A 05
Slide 4: Opening Remarks
1 Opening Remarks
Slide 5: 2020: A Challenging Year With Many Lessons Learned
5 2020: A Challenging Year With Many Lessons Learned X P reinvented itself in order to maintain growth and contribute to society 2020 LESSONS DIGITAL ACCELERATION: A SECULAR TREND CAPACITY TO ADAPT QUICKLY TO CHANGES ESG INITIATIVES AND A DIFFERENT WAY OF WORKING BEST HISTORICAL FINANCIALS AND KPIS
Slide 6: Strategy Update
2 Strategy Update
Slide 7: Addressing the Brazilian Financial Revenue Pool
7 Addressing the Brazilian Financial Revenue Pool E xpanding our TAM: XP has historically entered in new verticals and there is much more to come… Source: XP Inc. 5.5 2016 1.3 2017 2018 2020 2019 2.0 3.2 8.7 XP Revenue 2020 Total TAM 770.0 8.7 XP INC. GROSS REVENUE (in R$ bn) TOTAL FINANCIAL REVENUE
Slide 8: Connecting the Dots: How XP Will Complement the Client Journey
8 Connecting the Dots: How XP Will Complement the Client Journey From Assets to Liabilities , we intend to democratize financial services in its integrity COMPLETE RELATIONSHIP LIABILITIES ASSETS ASSET LIGHT MODEL + DISTRIBUTION CAPABILITIES 20 YEARS CREDIBILITY FINANCIAL EDUCATION OPEN PRODUCT PLAT
Slide 9: Collateralized Credit and Credit Card
9 Collateralized Credit and Credit Card EXPONENTIAL GROWTH Dec - 20 Mar - 20 Jun - 20 Sep - 20 64 3,874 380 1,368 CREDIT CARD NOW AVAILABLE FOR XP INVESTIMENTOS’ CLIENTS WITH THE FOLLOWING BENEFITS : ▪ ASSET LIGHT CREDIT PORTFOLIO, WITH 19 % RWA ▪ OVERCOLLATERAL SUPPORTING 0 % NPL RATIO ▪ COMPETITIV
Slide 10: Tech Development Example: Innovation from Scratch to Scale
10 Tech Development Example: Innovation from Scratch to Scale Soma is XP’s own Design System AN ECOSYSTEM TO UNITE, CREATE AND EVOLVE SOMA EFFICIENCY IMPACTS 60 MINUTES OF WORK REDUCED PER HEAD 40K HOURS OF PROJECT WORK REDUCED LESS 15% ON OUR TIME TO MARKET 2020 MAIN PROJECTS ALL XP INC. BRANDS BEN
Slide 11: 4Q20 KPIs and Financials
3 4Q20 KPIs and Financials
Slide 12: KPIs: AUC, Active Clients and NPS
12 KPIs AUC, Active Clients and NPS Assets Under Custody (AUC) (R$ in bn) Net Inflow (R$ in bn) 4Q19 4Q20 1,702 2,777 +63% Active Clients (‘000) Net Inflow Adj. by Extraordinary Inflows (R$ in bn) 411 660 198 Net Inflow 4Q19 51 Market Appreciatio n 4Q20 61% 15 29 117 37 1Q20 3Q20 2Q20 4Q20 36 29 39
Slide 13: Gross Revenue Breakdown
13 Gross Revenue Breakdown RETAIL INSTITUTIONAL ISSUER SERVICES DIGITAL CONTENT 72 % 12 % 13 % 1 % Other Revenue represented 3% of Total Gross Revenues Total Gross Revenues (in R$ mn) Highlights ▪ Strong growth of the Retail business, with 92 % and 81 % growth contribution, respectively, in those pe
Slide 14: Retail Revenue and Take Rate
14 Retail Revenue and Take Rate Strong expansion following client addition and healthy net inflow LTM Take Rate (LTM Retail Revenue / Average AUC) Retail Revenue (in R$ mn) 1.3% 4Q19 4Q20 1.3% 4Q20 1,844 4Q19 1,155 +60% Highlights ▪ Stable take rate as higher Equities and Futures’ trading volumes an
Slide 15: Financial Revenue: Recurring Stream Mainly Driven by Retail Growth
15 Financial Revenue: Recurring Stream Mainly Driven by Retail Growth 75% of Net Income from Financial Instruments is related to our Retail Business LTM Managerial Retail Revenue vs Accounting Financial Income (in R$ mn) 1Q20 1Q19 2Q19 4Q19 3Q19 2Q20 3Q20 4Q20 1,135 2,535 1,219 2,818 1,378 3,181 1,5
Slide 16: COGS and SG&A
16 29.9% 35.4% % of Net Revenue 599 717 4Q19 4Q20 +20% 2,584 2019 2020 1,794 +44% 31.7% 35.0% COGS and SG&A Gross margin slight compression following distribution channel investments COGS (in R$ mn) Operating Expenses (in R$ mn) Highlights ▪ Year - over - year gross margin contraction due to product
Slide 17: Adjusted EBITDA and Margin
17 Highlights ▪ 4 Q 20 growth was driven by : ( 1 ) strong performance of Retail and ( 2 ) operating leverage in SG&A, offset by higher COGS ratio ; ▪ Despite ( 1 ) 50 % year - over - year growth in headcount, ( 2 ) investing in new business and ( 3 ) investing in our IFA Network, adjusted EBITDA Ma
Slide 18: Adjusted Net Income and Margin
18 Highlights ▪ In 2020 , Adjusted Net Income grew 111 % vs . 2019 explained by ( 1 ) strong growth in Retail Revenue, ( 2 ) a lower effective tax rate and ( 3 ) operational leverage in SG&A . Adjusted Net Income and Margin Net margin expansion driven by strong growth in Retail, operating leverage a
Slide 19: Long-Term Incentive Plan Details
19 Long - Term Incentive Plan Details Originally planned dillution on track, with a one - time anticipation in 2H20 Note: (1) Not affected by new primary offerings; (2) Net of forfeited shares Share Based Compensation Expense (in R$ mn ) Highlights ▪ Our long - term incentive plan is based on the di
Slide 20: Guidance
4 Guidance
Slide 21: Revised Full-Year Adjusted Net Margin Guidance
21 REVISED 3 - 5 YEAR ADJUSTED NET MARGIN GUIDANCE DISCLAIMER – Estimated and subject to change. See “Important Disclosure” on page 2 of this presentation. 18% – 22% OLD 24% – 30% NEW G uidance Revision
Slide 22: Q&A
Q&A
Slide 23: Investors Relations
23 Investors Relations ir@xpi.com.br https://investors.xpinc.com/
Slide 24: Appendix
Appendix
Slide 25: KPIs: Average Trades and NPS
25 KPIs Average Trades and NPS Note: NPS, is an independent widely known survey methodology that measures the willingness of customers to recommend a Compan y’s products and services. The NPS calculation as of a given date reflects the average of the answers in the previous six months Retail Equity
Slide 26: Institutional and Issuer Services
26 Highlights ▪ ( 1 ) ECM, with 11 executed deals in the quarter and ( 2 ) DCM division, with participation in 55 deals, vs . 8 and 51 , respectively ; ▪ Revenue increase of 36 % for the full year, even with a low performance in the second quarter due to overall market conditions . Highlights ▪ Incr
Slide 27: Non-GAAP Financial Information: Adjusted Net Income and Adjusted EBITDA
27 Non - GAAP Financial Information Adjusted Net Income and Adjusted Gross Financial Assets 27 Adjusted Net Income (in R $ mn ) Adjusted EBITDA (in R $ mn ) 4Q20 4Q19 YoY 3Q20 QoQ FY20 FY19 YoY EBITDA 705 598 18% 681 4% 2,616 1,720 52% (+) Stock Based Compensation 180 8 n.a. 44 305% 293 8 n.a. (+) O
Slide 28: Non-GAAP Financial Information: Adjusted Gross Financial Assets
28 Non - GAAP Financial Information Adjusted Net Income and Adjusted Gross Financial Assets 28 Adjusted Gross Financial Assets (in R $ mn ) Floating Balance (in R $ mn ) Floating Balance (=net univested clients' deposits) 4Q20 3Q20 QoQ Assets (1,028) (1,484) -31% (-) Securities trading and intermedi