XP Inc. (NASDAQ: XP) Q2 2025 Earnings | 08/19/2025

XP Inc. reported a record net income and continued strong profitability in Q2 2025, despite a more challenging macroeconomic environment than initially expected. The company achieved its highest quarterly net income in history, driven by cost discipline and a diversified ecosystem, though revenue growth was modest.

Key Financial Highlights:

• Record Net Income: R$ 1.321 billion, an 18% increase year-over-year (YoY).

• Revenue: Gross revenue reached R$ 4.7 billion, a 4% growth YoY.

• Profitability: Return on Equity (ROE) expanded to 24.4% (up 223 basis points YoY). The net income margin was 29.7%.

• Earnings Per Share (EPS): Diluted EPS grew 22% YoY to R$ 2.46, outpacing net income growth due to the share buyback program.

• Client Assets: Total Assets Under Management and Administration (AUM/AUA) grew 17% YoY to R$ 1.9 trillion.

• Capital Strength: The BIS capital ratio remained very comfortable at 20.1%.

Operational & Strategic Updates:

1. Net New Money Challenges: Retail net new money was R$ 16 billion, while corporate/institutional saw outflows of R$ 6 billion. Management attributed the corporate outflows to companies needing liquidity for debt payments and reciprocity requirements for bank credit lines. They maintain a target of averaging R$ 20 billion per quarter in retail net new money for the year.

2. Diversified Ecosystem: Leadership emphasized the strength of XP's fully integrated ecosystem (retail, institutional, corporate), which provides defensive qualities and long-term growth. Key cross-sell verticals like credit cards, insurance, and new products (FX, Global Accounts, Consortium) showed very strong growth.

3. Fee-Based Model: The fee-based advisory model now represents 5% of client assets. Management sees this as a long-term growth trend (akin to the ~50% level in the U.S.) and highlighted XP's agnostic approach to different remuneration models as a key competitive advantage.

4. Wholesale Banking & Capital Markets (GCM): The quarter was challenging for investment banking due to lower industry volumes and aggressive pricing by competitors. However, the pipeline for the second half of the year is solid. The corporate credit book is held for securitization and sale, not for long-term holding.

5. Capital Distribution: The company reaffirmed its commitment to distributing over 50% of net income via dividends and buybacks in 2025 and 2026. A R$ 1 billion share buyback program is still active.

Outlook:

Management expressed confidence in accelerating revenue growth in the second half of 2025 to achieve their full-year target of ~10% growth. This optimism is based on:

• More business days in H2.

• Continued growth from new product verticals and a expanding sales force.

• A solid pipeline in capital markets and potential issuance ahead of anticipated tax changes in 2026.
  The company is still pursuing its medium-term financial goals, albeit currently targeting the lower end of the range, and remains focused on cost control and strategic investments to drive future growth.