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, reported today its
financial results for the second quarter of 2022.
Summary
Operating and Financial Metrics
2Q22
2Q21
YoY
1Q22
QoQ
Operating Metrics (unaudited)
Total AUC (in R$ bn)
846
817
4%
873
-3%
Adjusted AUC (in R$ bn)
731
619
18%
720
2%
Total Net Inflow (in R$bn)
43
75
-43%
46
-7%
Adjusted Net Inflow (in R$ bn)
43
45
-6%
30
44%
Active clients (in '000s)
3,629
3,140
16%
3,504
4%
Headcount (EoP)
6,339
4,489
41%
6,323
0%
IFAs (in '000s)
11.3
8.9
26%
10.7
5%
Retail DATs (in million)
2.3
2.7
-15%
2.3
-2%
Financial Metrics
Gross revenue (in R$ mn)
3,618
3,200
13%
3,270
11%
Retail – gross total revenues (in R$ mn)
2,786
2,452
14%
2,425
15%
Institutional – gross total revenues (in R$ mn)
436
375
16%
548
-20%
Issuer Services – gross total revenues (in R$ mn)
210
255
-17%
121
74%
Other & Digital Content – gross total revenues (in R$ mn)
185
118
57%
177
4%
Net Revenue (in R$ mn)
3,429
3,018
14%
3,121
10%
Gross Profit (in R$ mn)
2,469
2,127
16%
2,231
11%
Gross Margin
72.0%
70.5%
154 bps
71.5%
54 bps
Adjusted EBITDA1 (in R$ mn)
1,215
1,245
-2%
1,191
2%
Adjusted EBITDA margin
35.4%
41.3%
-584 bps
38.2%
-275 bps
Adjusted Net Income1 (in R$ mn)
1,046
1,034
1%
987
6%
Adjusted Net Margin
30.5%
34.2%
-375 bps
31.6%
-112 bps
New Verticals Operating Metrics (unaudited)
Individual Retirement Plans AUC² (in R$ billion)
54
39
38%
50
8%
Credit Card TPV (in R$ billion)
5.5
2.1
161%
4.5
22%
Credit Portfolio³ (in R$ billion)
12.9
6.8
89%
11.5
13%
New Verticals Financial Metrics (unaudited)
Gross Revenue from Selected Products (in R$ mn)
264
124
113%
247
7%
Individual Retirement Plans – gross total revenues (in R$ mn)
81
51
57%
74
8%
Credit Cards – gross total revenues (in R$ mn)
116
33
256%
97
20%
Credit – gross total revenues (in R$ mn)
44
25
78%
54
-18%
Insurance – gross total revenues (in R$ mn)
23
15
55%
23
0%
as a % of Total gross revenue
7.3%
3.9%
343 bps
7.6%
-28 bps
Discussion of Results
Total Gross Revenue
Total gross revenue grew 13% from R$3.2 billion in 2Q21 to
R$3.6 billion in 2Q22. Growth was primarily driven by the
Retail business, led especially by fixed income, float and better
performance fees year-over-year. Additionally, after a weak
beginning of the year, capital market activity picked up
quarter-on-quarter, with a better environment especially for DCM,
leading to a rebound in Issuer Services relative to 1Q22.
Retail Revenue
Retail revenue grew 14% from R$2.4 billion in 2Q21 to R$2.8
billion in 2Q22. As expected in a high Selic environment, the
strong demand for fixed income products, both in primary and
secondary markets, and a larger contribution from Float more than
offset weaker Equities and Futures revenues. Relative to 1Q22,
performance fees from the funds’ platform were also an important
factor to compensate for lower brokerage revenues.
In 2Q22, Retail-related revenues represented 78% of consolidated
Net Income from Financial Instruments, as per the Accounting Income
Statement, and were composed of Derivatives, Fixed Income secondary
transactions and Float, among others.
LTM Retail Take Rate1
Last twelve months take rate ended June 30th stable at
1.27%.
Institutional Revenue
Institutional gross revenue totaled R$436 million in
2Q22, up 16% from R$375 million in 2Q21, which was the best quarter
for Institutional gross revenue last year, demonstrating a solid
pace of growth in 2022 and reaping the benefits of our ecosystem
among institutional clients in our platform. Compared to 1Q22,
Institutional gross revenue went down by 20%, as already expected,
considering the high demand for derivatives in 1Q22 because of the
Russia-Ukraine war outbreak.
In 2Q22, Institutional revenue accounted for 12% of consolidated
Net Income from Financial Instruments, as per the Accounting Income
Statement, and was composed mostly of Fixed Income secondary
transactions and Derivatives.
Issuer Services Revenue
Issuer services revenue decreased 17% from R$255 million in 2Q21
to R$210 million in 2Q22. Following a quarter of mild
Capital Market activity in 1Q22, the pent-up demand and robust
pipeline anticipated in March were confirmed and the DCM deal flow
was strong in 2Q22, leading Issuer Services revenue to a 74%
expansion relative to the first quarter of 2022, but still weaker
than market activity in 2021.
Other Revenue2
Other revenue increased 57% in 2Q22 versus 2Q21, from R$118
million to R$185 million. Interest on gross cash was higher
due to increases in interest rates, along with results coming from
asset and liability management, partially offset by a lower digital
content revenue.
In 2Q22, 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
results related to asset and liability management.
Costs of Goods Sold and Gross Margin
COGS rose 8% from R$891 million in 2Q21 to R$960 million
in 2Q22, with a gross margin of 72.0%, 154 bps and 54 bps
higher than 2Q21 and 1Q22, respectively. Year-over-year margin
improvement was driven by a Retail product mix towards Fixed Income
and Float revenues, which more than offset higher credit card
cashback, following the TPV expansion, and prepaid expenses
amortization, resulting in a lower growth in COGS.
SG&A Expense (ex-Share-Based Compensation)
SG&A expenses (excluding share-based compensation) totaled
R$1,268 million in 2Q22, up 41% from R$900 million in 2Q21.
The increase was mainly related to Personnel Expenses following
headcount expansion over the last year, with a 60% increase in
2021, and a 41% increase in 2Q22 vs. 2Q21. Most of the headcount
increase is associated with investments in new businesses and
internal advisors, aiming to strengthen our investment advisory
footprint and increase our total addressable market beyond
investments.
In the first half of 2022, total bonuses grew only 13%
year-over-year, despite a headcount increase of 41% in the same
period. Total bonuses, as a percentage of net revenue, decreased
from 13.7% to 13.4% in the first half of 2022 compared the same
period in 2021.
Bonuses are accrued monthly and paid on a semi-annual basis.
Following the revenue seasonality, mostly because of performance
fees, bonus expenses are usually higher on every second and fourth
quarters.
Share-Based Compensation
In 2Q22, Shared-Based Compensation expenses in SG&A were 36%
higher, from R$147 million in 2Q21 to R$200 million in 2Q22,
following additional grants made in 4Q21, and remaining flat
quarter-over-quarter. A portion close to R$11 million of the total
Share-Based Compensation of the quarter is related to IFAs and is
allocated in COGS.
Adjusted EBITDA3
Adjusted EBITDA decreased 2% from R$1,245 million in 2Q21 to
R$1,215 million. Adjusted EBITDA margin was 35.4%, down 584
bps, driven mainly by higher relative SG&A expenses due to
headcount expansion and investments in new verticals. Despite
having approximately R$500 million in expenses related to
early-stage initiatives (banking, direct international investments
platform, internal advisors and XTAGE) in 1H22, Adjusted EBITDA
Margin stood above 35%.
Adjusted Net Income4
Adjusted Net Income grew 1%, from R$1,034 million in 2Q21 to
R$1,046 million in 2Q22, in connection with the factors
explaining the Adjusted EBITDA and a lower normalized effective tax
rate, which is a consequence of revenue mix leaning towards net
income from financial instruments. The effective tax rate,
normalized by withholding taxes, was 13.7% in 2Q22, versus
17.5% in 2Q21. Adjusted Net Margin decreased 375 bps in 2Q21 to
30.5% in 2Q22, above the top of medium-term guidance of 30%.
Other Information
Webcast and Conference Call Information
The Company will host a webcast to discuss its second quarter
financial results on Tuesday, August 9th, 2022, at 5:00 pm ET (6:00
pm BRT). To participate in the earnings webcast please subscribe at
2Q22 Earnings Web Meeting. The replay will be available on XP’s
investor relations website at https://investors.xpinc.com/
Important Disclosure
In reviewing the information contained in this release, 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 release is prepared
by XP Inc. (the “Company,” “we” or “our”), is solely for
informational purposes. This release does not constitute a
prospectus and does not constitute an offer to sell or the
solicitation of an offer to buy any securities. In addition, this
document and any materials distributed in connection with this
release are not directed to, or intended for distribution to or use
by, any person or entity that is a citizen or resident or located
in any locality, state, country or other jurisdiction where such
distribution, publication, availability or use would be contrary to
law or regulation or which would require any registration or
licensing within such jurisdiction.
This release was prepared by the Company. Neither the Company
nor any of its affiliates, officers, employees or agents, make any
representation or warranty, express or implied, in relation to the
fairness, reasonableness, adequacy, accuracy or completeness of the
information, statements or opinions, whichever their source,
contained in this release or any oral information provided in
connection herewith, or any data it generates and accept no
responsibility, obligation or liability (whether direct or
indirect, in contract, tort or otherwise) in relation to any of
such information. The information and opinions contained in this
release are provided as at the date of this release, are subject to
change without notice and do not purport to contain all information
that may be required to evaluate the Company. The information in
this release is in draft form and has not been independently
verified. The Company and its affiliates, officers, employees and
agents expressly disclaim any and all liability which may be based
on this release and any errors therein or omissions therefrom.
Neither the Company nor any of its affiliates, officers, employees
or agents makes any representation or warranty, express or implied,
as to the achievement or reasonableness of future projections,
management targets, estimates, prospects or returns, if any.
The information contained in this release does not purport to be
comprehensive and has not been subject to any independent audit or
review. Certain of the financial information as of and for the
periods ended of December 31, 2021 and December 31, 2020, 2019,
2018 and 2017 has been derived from audited financial statements
and all other financial information has been derived from unaudited
interim financial statements. A significant portion of the
information contained in this release is based on estimates or
expectations of the Company, and there can be no assurance that
these estimates or expectations are or will prove to be accurate.
The Company’s internal estimates have not been verified by an
external expert, and the Company cannot guarantee that a third
party using different methods to assemble, analyze or compute
market information and data would obtain or generate the same
results.
Statements in the release, including those regarding the
possible or assumed future or other performance of the Company or
its industry or other trend projections, constitute forward-looking
statements. These statements are generally identified by the use of
words such as “anticipate,” “believe,” “could,” “expect,” “should,”
“plan,” “intend,” “estimate” and “potential,” among others. By
their nature, forward-looking statements are necessarily subject to
a high degree of uncertainty and involve known and unknown risks,
uncertainties, assumptions and other factors because they relate to
events and depend on circumstances that will occur in the future
whether or not outside the control of the Company. Such factors may
cause actual results, performance or developments to differ
materially from those expressed or implied by such forward-looking
statements and there can be no assurance that such forward-looking
statements will prove to be correct. These risks and uncertainties
include factors relating to: (1) general economic, financial,
political, demographic and business conditions in Brazil, as well
as any other countries we may serve in the future and their impact
on our business; (2) fluctuations in interest, inflation and
exchange rates in Brazil and any other countries we may serve in
the future; (3) competition in the financial services industry; (4)
our ability to implement our business strategy; (5) our ability to
adapt to the rapid pace of technological changes in the financial
services industry; (6) the reliability, performance, functionality
and quality of our products and services and the investment
performance of investment funds managed by third parties or by our
asset managers; (7) the availability of government authorizations
on terms and conditions and within periods acceptable to us; (8)
our ability to continue attracting and retaining new
appropriately-skilled employees; (9) our capitalization and level
of indebtedness; (10) the interests of our controlling
shareholders; (11) changes in government regulations applicable to
the financial services industry in Brazil and elsewhere; (12) our
ability to compete and conduct our business in the future; (13) the
success of operating initiatives, including advertising and
promotional efforts and new product, service and concept
development by us and our competitors; (14) changes in consumer
demands regarding financial products, customer experience related
to investments and technological advances, and our ability to
innovate to respond to such changes; (15) changes in labor,
distribution and other operating costs; (16) our compliance with,
and changes to, government laws, regulations and tax matters that
currently apply to us; (17) other factors that may affect our
financial condition, liquidity and results of operations.
Accordingly, you should not place undue reliance on forward-looking
statements. The forward-looking statements included herein speak
only as at the date of this release and the Company does not
undertake any obligation to update these forward-looking
statements. Past performance does not guarantee or predict future
performance. Moreover, the Company and its affiliates, officers,
employees and agents do not undertake any obligation to review,
update or confirm expectations or estimates or to release any
revisions to any forward-looking statements to reflect events that
occur or circumstances that arise in relation to the content of the
release. You are cautioned not to unduly rely on such
forward-looking statements when evaluating the information
presented and we do not intend to update any of these
forward-looking statements.
Market data and industry information used throughout this
release are based on management’s knowledge of the industry and the
good faith estimates of management. The Company also relied, to the
extent available, upon management’s review of industry surveys and
publications and other publicly available information prepared by a
number of third-party sources. All of the market data and industry
information used in this release involves a number of assumptions
and limitations, and you are cautioned not to give undue weight to
such estimates. Although the Company believes that these sources
are reliable, there can be no assurance as to the accuracy or
completeness of this information, and the Company has not
independently verified this information.
The contents hereof should not be construed as investment,
legal, tax or other advice and you should consult your own advisers
as to legal, business, tax and other related matters concerning an
investment in the Company. The Company is not acting on your behalf
and does not regard you as a customer or a client. It will not be
responsible to you for providing protections afforded to clients or
for advising you on the relevant transaction.
This release includes our Float, Adjusted Gross Financial
Assets, Adjusted EBITDA and Adjustments to Reported Net Income,
which are non-GAAP financial information. We believe that such
information is meaningful and useful in understanding the
activities and business metrics of the Company’s operations. We
also believe that these non-GAAP financial measures reflect an
additional way of viewing aspects of the Company’s business that,
when viewed with our International Financial Reporting Standards
(“IFRS”) results, as issued by the International Accounting
Standards Board, provide a more complete understanding of factors
and trends affecting the Company’s business. Further, investors
regularly rely on non-GAAP financial measures to assess operating
performance and such measures may highlight trends in the Company’s
business that may not otherwise be apparent when relying on
financial measures calculated in accordance with IFRS. We also
believe that certain non-GAAP financial measures are frequently
used by securities analysts, investors and other interested parties
in the evaluation of public companies in the Company’s industry,
many of which present these measures when reporting their results.
The non-GAAP financial information is presented for informational
purposes and to enhance understanding of the IFRS financial
statements. The non-GAAP measures should be considered in addition
to results prepared in accordance with IFRS, but not as a
substitute for, or superior to, IFRS results. As other companies
may determine or calculate this non-GAAP financial information
differently, the usefulness of these measures for comparative
purposes is limited. A reconciliation of such non-GAAP financial
measures to the nearest GAAP measure is included in this
release.
For purposes of this release:
“Active Clients” means the total number of retail clients served
through our XP Investimentos, Rico, Clear, XP Investments and XP
Private (Europe) brands, with an AUC above R$100.00 or that have
transacted at least once in the last thirty days. For purposes of
calculating this metric, if a client holds an account in more than
one of the aforementioned entities, such client will be counted as
one “active client” for each such account. For example, if a client
holds an account in each of XP Investimentos and Rico, such client
will count as two “active clients” for purposes of this metric.
“Assets Under Custody (AUC)” means the market value of all
client assets invested through XP’s platform and that is related to
reported Retail Revenue, including equities, fixed income
securities, mutual funds (including those managed by XP Gestão de
Recursos Ltda., XP Advisory Gestão de Recursos Ltda. and XP Vista
Asset Management Ltda., as well as by third-party asset managers),
pension funds (including those from XP Vida e Previdência S.A., as
well as by third-party insurance companies), exchange traded funds,
COEs (Structured Notes), REITs, and uninvested cash balances (Float
Balances), among others. Although AUC includes custody from
Corporate Clients that generate Retail Revenue, it does not include
custody from institutional clients (asset managers, pension funds
and insurance companies).
Rounding
We have made rounding adjustments to some of the figures
included in this release. Accordingly, numerical figures shown as
totals in some tables may not be an arithmetic aggregation of the
figures that preceded them.
Unaudited Managerial Income Statement
(in R$ mn)
2Q22
2Q21
YoY
1Q22
QoQ
Managerial Income Statement
Total Gross Revenue
3,618
3,200
13%
3,270
11%
Retail
2,786
2,452
14%
2,425
15%
Institutional
436
375
16%
548
-20%
Issuer Services
210
255
-17%
121
74%
Digital Content
11
29
-62%
11
8%
Other
173
88
96%
166
4%
Net Revenue
3,429
3,018
14%
3,121
10%
COGS
(960)
(891)
8%
(891)
8%
As a % of Net Revenue
(28.0%)
(29.5%)
1.5 p.p
(28.5%)
0.5 p.p
Gross Profit
2,469
2,127
16%
2,231
11%
Gross Margin
72.0%
70.5%
1.5 p.p
71.5%
0.5 p.p
SG&A
(1,268)
(900)
41%
(1,051)
21%
Share Based Compensation1
(200)
(147)
36%
(200)
0%
EBITDA
1,001
1,080
-7%
980
2%
EBITDA Margin
29.2%
35.8%
-6.6 p.p
31.4%
-2.2 p.p
Adjusted EBITDA
1,215
1,245
-2%
1,191
2%
Adjusted EBITDA Margin
35.4%
41.3%
-5.8 p.p
38.2%
-2.8 p.p
D&A
(56)
(58)
-5%
(61)
-9%
EBIT
945
1,022
-7%
919
3%
Interest expense on debt
(77)
(20)
286%
(48)
60%
Share of profit or (loss) in joint ventures and associates
(1)
1
-211%
(14)
-85%
Taxable equivalent adjustments2
190
126
51%
161
18%
EBT (Taxable equivalent)
1,057
1,128
-6%
1,017
4%
Tax expense (Normalized)
(144)
(197)
-27%
(163)
-11%
Effective tax rate (Normalized)
(13.7%)
(17.5%)
3.8 p.p
(16.0%)
2.4 p.p
Net Income
913
931
-2%
854
7%
Net Margin
26.6%
30.9%
-4.2 p.p
27.4%
-0.8 p.p
Adjustments
133
102
30%
133
0%
Adjusted Net Income
1,046
1,034
1%
987
6%
Adjusted Net Margin
30.5%
34.2%
-3.7 p.p
31.6%
-1.1 p.p
1 A portion of total Share-Based Compensation is related to IFAs
and allocated in COGS. 2 Tax adjustments are related to tax
withholding expenses that are recognized net in gross revenue.
Accounting Income Statement (in R$ mn)
2Q22
2Q21
YoY
1Q22
QoQ
Accounting Income Statement
Net revenue from services rendered
1,553
1,601
-3%
1,265
23%
Brokerage commission
500
650
-23%
560
-11%
Securities placement
454
513
-11%
291
56%
Management fees
478
384
24%
329
45%
Insurance brokerage fee
35
35
0%
36
-4%
Educational services
7
27
-75%
8
-13%
Banking Fees
99
42
138%
93
6%
Other services
116
111
4%
89
30%
Taxes and contributions on services
(136)
(160)
-15%
(141)
-4%
Net income from financial instruments
at amortized cost and at fair value through other comprehensive
income
712
(331)
-316%
(145)
-592%
Net income from financial instruments at fair value through
profit or loss
1,164
1,748
-33%
2,001
-42%
Total revenue and income
3,429
3,018
14%
3,121
10%
Operating costs
(958)
(838)
14%
(864)
11%
Selling expenses
(39)
(62)
-36%
(19)
105%
Administrative expenses
(1,478)
(1,115)
33%
(1,293)
14%
Other operating revenues (expenses), net
(7)
72
-110%
0
-16523%
Expected credit losses
(1)
(54)
-97%
(26)
-95%
Interest expense on debt
(77)
(20)
286%
(48)
60%
Share of profit or (loss) in joint ventures and associates
(1)
1
-211%
(14)
-85%
Income before income tax
867
1,002
-13%
856
1%
Income tax expense
45
(71)
-164%
(2)
-2170%
Net income for the period
913
931
-2%
854
7%
Balance Sheet (in R$ mn)
2Q22
1Q22
Assets
Cash
3,244
3,222
Financial assets
156,827
150,281
Fair value through profit or loss
86,077
86,041
Securities
67,521
64,600
Derivative financial instruments
18,556
21,442
Fair value through other comprehensive income
36,183
33,604
Securities
36,183
33,604
Evaluated at amortized cost
34,568
30,635
Securities
8,178
6,379
Securities purchased under agreements to resell
4,812
6,061
Securities trading and intermediation
3,149
2,489
Accounts receivable
627
358
Loan Operations
16,418
14,432
Other financial assets
1,384
917
Other assets
5,318
4,960
Recoverable taxes
177
168
Rights-of-use assets
258
269
Prepaid expenses
4,085
3,972
Other
797
551
Deferred tax assets
1,541
1,376
Investments in associates and joint ventures
2,230
2,163
Property and equipment
304
298
Goodwill & Intangible assets
812
794
Total Assets
170,276
163,093
2Q22
1Q22
Liabilities
Financial liabilities
113,550
110,397
Fair value through profit or loss
24,714
28,755
Securities
5,637
7,410
Derivative financial instruments
19,077
21,345
Evaluated at amortized cost
88,837
81,643
Securities sold under repurchase agreements
30,534
24,132
Securities trading and intermediation
15,272
18,313
Financing instruments payable
31,530
28,997
Accounts payables
476
463
Borrowings
1,829
1,691
Other financial liabilities
9,195
8,048
Other liabilities
40,416
37,127
Social and statutory obligations
985
443
Taxes and social security obligations
280
435
Private pension liabilities
39,102
36,207
Provisions and contingent liabilities
32
31
Other
17
11
Deferred tax liabilities
15
28
Total Liabilities
153,981
147,552
Equity attributable to owners of the Parent company
16,292
15,538
Issued capital
0
0
Capital reserve
15,317
15,148
Other comprehensive income
(371)
(292)
Treasury
(418)
(172)
Retained earnings
1,765
854
Non-controlling interest
3
3
Total equity
16,296
15,541
Total liabilities and equity
170,276
163,093
Adjusted Cash Flow (in R$
mn)
2Q22
1Q22
2Q21
Adjusted Cash Flows From Operating Activities [A+B+C+D]
(147)
1,119
(523)
EBITDA
1,001
980
1,080
Share based plan
21
96
165
Bonus Provision (Payment)
521
(609)
438
Tax Provision (Payment)
(72)
(229)
(23)
Interest paid
(96)
(7)
(4)
Expected credit losses on other financial assets
14
2
39
Other Working Capital
(134)
(209)
30
Net Cash Flows From Operations [A]
1,255
24
1,726
Net Cash Flows From Financial Instruments [B]
(1,421)
876
(2,298)
Net Cash Flows From Credit Cards, Credit and Deposits [C]
(1)
(51)
(1)
Net Cash Flow From Float and Other Client's Activities [D]
20
270
50
Adjusted net cash flows from investing activities
(309)
(126)
(982)
Investments in IFA's Network
(202)
-
(837)
Acquisition of PP&E and Intangible
(22)
(14)
(108)
Investments/Acquisitions in associates and subsidiaries
(85)
(112)
(37)
Adjusted net cash flows from financing activities
(691)
(41)
1,884
Net increase (decrease) in cash and cash equivalents
(1,147)
952
379
Cash and Cash Equivalents at Beginning of Period
4,667
3,752
2,840
Effects of exchange rate changes on cash and cash equivalents
16
(37)
(2)
Cash and Cash Equivalents at End of Period
3,536
4,667
3,217
Reconciliation of Adjusted Cash Flow
In addition to cash flow from operating activities presented in
accordance with GAAP, we use adjusted cash flow, a non-GAAP
measure, to measure liquidity. We present Adjusted Cash Flow
because we believe it is a useful indicator of liquidity that
provides information to management and investors about the amount
of cash generated from our core operations after changes in working
capital.
Adjusted Cash Flow has limitations as an analytical tool, and
you should not consider Adjusted Cash Flow in isolation or as an
alternative to cash flow from operating activities or any other
liquidity measure determined in accordance with GAAP. You are
encouraged to evaluate each adjustment. In addition, in evaluating
Adjusted Cash Flow, you should be aware that in the future, we may
incur changes similar to the adjustments in the presentation of
Adjusted Cash Flow. In addition, Adjusted Cash Flow may not be
comparable to similarly titled measures used by other companies in
our industry or across different industries.
The table set forth below presents a reconciliation of our cash
flow from operating activities, investments and financing
activities to Adjusted Cash Flow:
2Q22
1Q22
2Q21
Adjusted Cash Flow Reconciliation
Net cash flows from operating activities
(615)
1,103
(1,360)
(+) Investments in IFA's Network
202
-
837
(+) Financing instruments payable
267
16
-
Adjusted net cash flow (used in)/from operating activities
(147)
1,119
(523)
Net cash flows from investing activities
(108)
(126)
(145)
(-) Investments in IFA's Network
(202)
-
(837)
Adjusted net cash flow (used in)/from investing activities
(309)
(126)
(982)
Net cash flows from financing activities
(424)
(25)
1,884
(-) Financing instruments payable
(267)
(16)
-
Adjusted net cash flow (used in) from financing activities
(691)
(41)
1,884
Net increase (decrease) in cash and cash equivalents
(1,147)
952
379
Float and Adjusted Gross Financial Assets (in R$ mn)
We present Adjusted Gross Financial Assets because we believe
this metric captures the liquidity that is, in fact, available to
us, net of the portion of liquidity that is related to our Float
Balance (and therefore attributable to clients). We calculate
Adjusted Gross Financial Assets as the sum of (1) Cash and
Financial Assets (comprised of Cash plus Securities – Fair value
through profit or loss, plus Securities – Fair value through other
comprehensive income, plus Securities – Evaluated at amortized
cost, plus Derivative financial instruments, plus Securities
(purchased under agreements to resell), plus Loans and Foreign
exchange portfolio (assets) less (2) Financial Liabilities
(comprised of the sum of Securities loaned, Derivative financial
instruments, Securities sold under repurchase agreements and
Private pension liabilities), Deposits, Structured Operation
Certificates (COE), Financial Bills, Foreign exchange portfolio
(liabilities), Credit cards operations and (3) less Float
Balance.
It is a measure that we track internally daily, and it more
intuitively reflects the effect of the operational profits we
generate and the variations between working capital assets and
liabilities (cash flows from operating activities), investments in
fixed and intangible assets and investments in the IFA Network
(cash flows from investing activities) and inflows and outflows
related to equity and debt securities in our capital structure
(cash flows from financing activities).Our management treats all
securities and financial instrument assets, net of financial
instrument liabilities, as balances that compose our total
liquidity, with subline items (such as, for example, “securities at
fair value through profit and loss” and “securities at fair value
through other comprehensive income”) expected to fluctuate
substantially from quarter to quarter as our treasury manages and
allocates our total liquidity to the most suitable financial
instruments.
Adjusted Gross Financial Assets
2Q22
1Q22
Assets
156,170
150,528
(+) Cash
3,244
3,222
(+) Securities - Fair value through profit or loss
67,521
64,600
(+) Securities - Fair value through other comprehensive income
36,183
33,604
(+) Securities - Evaluated at amortized cost
8,178
6,379
(+) Derivative financial instruments
18,556
21,442
(+) Securities purchased under agreements to resell
4,812
6,061
(+) Loans and credit card operations
16,418
14,432
(+) Foreign exchange portfolio
1,259
788
Liabilities
(127,216)
(118,619)
(-) Securities
(5,637)
(7,410)
(-) Derivative financial instruments
(19,077)
(21,345)
(-) Securities sold under repurchase agreements
(30,534)
(24,132)
(-) Private Pension Liabilities
(39,102)
(36,207)
(-) Deposits
(15,166)
(14,093)
(-) Structured Operations
(9,456)
(8,576)
(-) Financial Bills
(3,235)
(2,792)
(-) Foreign exchange portfolio
(1,649)
(1,253)
(-) Credit card operations
(3,360)
(2,813)
(-) Float
(12,123)
(15,824)
(=) Adjusted Gross Financial Assets
16,831
16,084
Float (=net uninvested clients' deposits)
2Q22
1Q22
Assets
(3,149)
(2,489)
(-) Securities trading and intermediation
(3,149)
(2,489)
Liabilities
15,272
18,313
(+) Securities trading and intermediation
15,272
18,313
(=) Float
12,123
15,824
Adjusted EBITDA (in R$ mn)
2Q22
2Q21
YoY
1Q22
QoQ
EBITDA
1,001
1,080
-7%
980
2%
(+) Share Based Compensation
214
165
29%
212
1%
(+) Offering expenses
-
-
n.a.
-
n.a.
Adj. EBITDA
1,215
1,245
-2%
1,191
2%
Adjusted Net Income (in R$ mn)
2Q22
2Q21
YoY
1Q22
QoQ
Net Income
913
931
-2%
854
7%
(+) Share Based Compensation
214
165
29%
212
1%
(+/-) Taxes
(81)
(63)
28%
(79)
2%
Adj. Net Income
1,046
1,034
1%
987
6%
1
LTM Take Rate (LTM Retail Revenue /
Average AUC). Average AUC = (Sum of AUC from the beginning of
period and each quarter-end in a given year, being 5 data points in
one year)/5
2
Other and Digital Content Combined;
3 See appendix for a reconciliation of Adjusted EBITDA; 4
See appendix for a reconciliation of
Adjusted Net Income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809005943/en/
Investor Relations Contact ir@xpi.com.br
XP (NASDAQ:XP)
Historical Stock Chart
From Mar 2024 to Apr 2024
XP (NASDAQ:XP)
Historical Stock Chart
From Apr 2023 to Apr 2024