XP Inc. (NASDAQ:XP) Q2 2025 Earnings Call Transcript

XP Inc. (NASDAQ:XP) Q2 2025 Earnings Call Transcript August 18, 2025

XP Inc. beats earnings expectations. Reported EPS is $0.4541, expectations were $0.43.

Andre Parize: Good evening, everyone. I’m Andre Parize , Investor Relations Officer at XP, and it’s a pleasure to be here with you today. On behalf of the company, I would like to thank you all for your interest, and welcome you to our Second Quarter 2025 Earnings Call. Today’s presentation will be led by our CEO, Thiago Maffra; and our CFO, Victor Mansur, who will both be available for the Q&A session right after the presentation. [Operator Instructions]. Before we begin, please refer to our legal disclaimers on Page 2, where we provide additional information regarding forward-looking statements. You can also find more information in the SEC Filings section of our IR website. Now I will turn it over to Thiago Maffra. Good afternoon, Thiago.

Thiago Maffra: Thank you, Andre. Good evening, everyone. I appreciate you all joining us today for the second quarter 2025 earnings call. So half year is already behind us, but there is much more to come. We are still working hard, I would say, in an obsessive way to keep evolving our clients’ journey experience and product offering. 2025 has demonstrated to be more challenged than we estimated, demanding more efforts from all our teams to keep growing our business in a profitable way. As a result, we are continuously increasing our profitability. Now analyzing the main KPIs. The first one is client assets, AUM and AUA for which we posted BRL 1.9 trillion, a 17% growth year-over-year. Total advisers accounted for 18,200 represent flat figures year-over-year.

And on active clients, we posted 4.7 million clients with 2% growth year-over-year. During the quarter, gross revenues marked BRL 4.7 billion with a 4% growth year-over-year. EBT year-over-year is 5% lower, reaching BRL 1.3 billion, mainly because last year, we had positive impacts from overhead, turning this quarter not like-for-like. And on the bottom line, it’s another record. We achieved the highest net income in our history, reaching BRL 1.321 billion. It represents an 18% year-over-year growth. On profitability, we achieved 24.4% ROE during the quarter, a 223 bps expansion versus second quarter ’24. 10 out of 11 quarters posting consecutive growth. This means 10 out of 11 quarters posting consecutive growth. On capital ratio, we printed a comfortable level at 20.1%.

It represented an increase of 110 bps quarter-over-quarter. Regarding diluted EPS, we posted 22% growth year-over-year, another quarter in which it grew faster than net income, driven by our share buyback program execution. As we speak, we still have a share buyback program of BRL 1 billion to be executed until next year. As I mentioned during last quarters, our capital distribution plan is aligned with our guidance, and we will operate the business with a big ratio between 16% and 19%. Now let’s see more details on the next slide. Since last quarter, we have been sharing new info to provide a better understanding of our ecosystem, considering institutional clients in total client assets and provided assets under management from our asset management business and AUA from our fund administration business.

Said that, our total clients, AUM and AUA comprehend almost BRL 1.9 trillion, which represented a 17% growth year-over-year. On the right hand of the slide is presented how net new money evolved. This net new money is only related to client assets. This quarter, we marked BRL 16 billion in retail net new money and minus BRL 6 billion in corporate and institutional. It’s important to mention that during the second quarter, SMEs and large corporates net new money reflected the dynamics of the current macro scenario. First, due to payment of higher interest expense, companies have less liquidity than before. Second, in order to minimize this liquidity constraint, some companies withdrew part of their investments with us as they were used in reciprocity for credit lines with other players.

Q&A Session

On the retail side, the lower tax-exempt volumes in GCM impacted primary offerings allocation and consequently, the net new money coming from individuals. We keep developing our product offering and capabilities to constantly offer the best investment alternatives to clients, which should drive higher net new money in the long term. I would say that the current environment has proven to be more challenged than we expected at the beginning of the year, especially for investment banking origination activities. However, we still have a better GCM pipeline for the second half of the year, new investment products offering and other initiatives supporting our efforts to achieve retail net new money averaging BRL 20 billion per quarter this year. On the next slide, let’s delve into our retail strategy.

Here, I’d like to address some topics which are connected to our business model. Today, the company presents a more complete ecosystem with retail, institutional and corporate divisions fully integrated to generate investment opportunities. This benefits us in many instances. One of them is the fixed income platform in which we are much more complete now, being one, the largest distributor of midsized banks time deposits; second, innovative in developing new instruments such as the bond repack structured notes; and third, also having a robust wholesale bank franchise with a corporate secured book to serve retail clients. As part of our business model to engage clients on another level, we also launched new verticals in strengthening our investment portfolio while attending clients to demand in banking, insurance, retirement plans, global account, FX and now consortium.

This competitive ecosystem enabled us to present higher profitability during the last years. And there is much more to do since we will keep investing in channel diversification, expanding sales teams, improving our product platform experience with a more accurate client offering and improving our intelligent segmentation. Recently, we also launched new guidelines to the FFAs, sharing our knowledge, tools and methodologies focusing on opportunities to increase productivity, responsiveness and efficiency. And independently if it’s through XP internal teams or FFAs, we also developed and agreed in a new and more comprehensive way to serve our clients. New rules are aligned with one objective to improve client experience. Our main goal is to keep serving clients with excellence no matter in which channel or remuneration model they have chosen.

With this new way of growing business, we are convinced that we have a more sustainable revenue model and profitability is a consequence. For sure, the current diversified ecosystem defines XP as a defensive business with long-term growth. We are confident that our unique business model will keep evolving to achieve our long-term goals, which is to become the leader in investments in Brazil. Moving to the next slide. We see on the left-hand side how we serve clients with different models, channels and how XP is remunerated. By the way, we have already launched fee-based model a long time ago, anticipating what’s becoming reality today. It means that IFAs and internal advisers can attend clients with transactional fees or fee-based model according to clients’ preference.

We also have RIAs and consultants, which work in a fee-based model, attending clients with asset custody in different platforms. What we see today from the client perspective is a higher demand for fee-based model when compared to the recent past. Today, the fee-based model represents only 5% of our total client assets. Looking at developed markets, for example, the U.S., the fee-based model achieved around 50% share of clients’ assets. If this is a trend in Brazil, we are ready to serve our clients. Our capacity to attend clients with different models differentiate us from competitors, and it translated into more share of wallet and longer lifetime. Moving now to the next slide about retail cross-sell. As we have stated before, we have implemented new initiatives and products to diversify our revenue streams during the last years.

Starting with credit card, it grew 8% year-over-year, marking BRL 12.4 billion in TPV during the quarter. As we anticipated last quarter, we launched new products targeting affluent and private banking clients. We estimate that with the new value proposition, cards should accelerate in the next years. Life insurance written premiums posted 45% growth year-over- year. As we said in recent quarters, our insurance business is a growth avenue, which is still at its early stage. Since it presents a huge penetration potential, we understand that we’ll keep growing at a fast pace on a quarterly basis. On retirement plans, our client assets posted 15% growth year-over-year on the second quarter and reached BRL 86 billion. We keep expanding our sales force to increase our relevance in this industry since our market share is mid-single digit, and there is a relevant addressable market to penetrate during the next years.

In new products, we consider FX, global investments, digital account and consortium. Altogether, they presented a 146% growth year-over-year with revenues reaching BRL 256 million this quarter. It’s important to note that consortium came from scratch, and it’s gaining traction month after month. Moving to the next slide, we will address our wholesale bank evolution. Taking GCM into consideration, this quarter, we saw decent industry volumes, but not close to last year’s. Coupled with that, some players became more aggressive in pricing, trying to gain market share and therefore, resulting in lower fees. Finally, tax incentivized products have lost share in total industry volumes during this quarter. For the next quarter, pipeline is solid. We have more opportunities, and there is a chance to reaccelerate our revenue growth.

Regarding XP’s broker-dealer, it was another positive quarter, and we became the leader in the local industry with 17% market share. As we saw this quarter, we still expect to see improvements bit by bit until 2026. This quarter, we kept the same size of our corporate securities book with BRL 34 billion. Bear in mind that we can have a change in tax rules, which can impact currently tax-exempt fixed income instruments. We are now expecting to increase this book during the year. The rationale behind this is that companies will try to anticipate their debt issuance before the change. Also for next year, with elections in sight, we are likely to see an increasing volatility and therefore, a reduction in corporate clients’ appetite for new issuance.

So our strategy, that being the case, is to keep this warehouse book until we sell it to our retail clients during the next year. To conclude my presentation, I would like to reinforce that our innovative offering, advisory model, costs and capital discipline are translating into a higher profitability, even considering the more challenging scenario. Our ecosystem is way more complete than years ago, and there is a big opportunity in front of us to expand our core business, our retail cross-sell and our wholesale activity. We are confident that by executing this, we reach our goals regarding market leadership in investments and also regarding our long-term growth. Now I will hand it over to Victor, who will provide a deeper look into our financial performance this quarter, and I will be back for the Q&A session.

Victor Andreu Mansur Farinassi: Thank you, Maffra. Good evening, everyone. It’s a pleasure to be here with you to discuss our financial performance for the second quarter of 2025. Starting with total gross revenues. Total gross revenues for the quarter reached BRL 4.7 billion, representing a 4% increase year-over-year and a 2% increase quarter-over-quarter. It was another quarter that retail gained participation in total revenues, now representing 77% out of total. This quarter, once again, our main driver for retail growth year-over-year were fixed income and other retail, which includes retail new verticals such as global accounts and consortium. On the wholesale bank, corporate was the highlight, partially offsetting the negative impact on issuer services due to a tough comp from 2Q ’24.

I will share more details during the next slides. Retail revenue posted BRL 3.6 billion in the quarter, a 9% growth year-over-year and a 4% growth quarter-over- quarter. The quarter growth was mainly driven by equities, which presented a higher ADTV in the period. Equities printed slightly more than BRL 1 billion with 7% growth quarter-over-quarter. On a year-over-year perspective, fixed income was the main contributor, growing 20% and reaching BRL 988 million in revenue. It’s important to mention that in other retail concept, the main contributor is the float remunerations, where we had higher average volumes with higher interest rates during the quarter. Now let’s move to the next slides with Corporate and Issuer Services. Before moving to the quarter results, it’s important to mention that on 2Q ’24, we posted all-time high corporate and I services revenues, backed by a strong DCM activity.

Therefore, we have a tough comp for this quarter. Issuer services presented BRL 268 million, minus 30% year-over-year and a minus 5% quarter- over-quarter. On the other hand, corporate revenues posted a solid 14% increase year-over-year and was flat quarter-over-quarter. It reached BRL 279 million, supported by our capacity to offer different solutions to our clients, mainly if derivatives. Moving on to the next slide, we will explore our SG&A and efficiency ratios. Our SG&A expenses totaled BRL 1.56 billion in this quarter, with a 10% growth year-over-year and also quarter-over-quarter. We keep investing in our business. And this quarter, we had higher expense in the non-people category, most of it explained by marketing and technology investments.

During the quarter, despite the slower pace in our revenue growth, our operational cost discipline supported our efficiency ratio at 34.5% last 12 months. When compared to last year, our efficiency ratio improved 161 basis points. We will keep our plan to improve our business efficiency, and this will come in parallel with new investments that will continue to be made, aiming to enhance our tech platform, our product offerings and sales team expansion. Moving to the next slide, let’s see our EBT. Just to recap, last year, we had positive EBT impact from the overhead related to the head of certain assets and liabilities. Therefore, EBT is not like-for-like annual comparison. On 2Q ’25, we printed BRL 1.3 billion EBT, which represented a 4% increase quarter-over-quarter.

Even considering the issue services impact on our revenues, we are able to expand our EBT margin by 50 basis points. On the next slide, we see the net income. Net income achieved BRL 1.3 billion, an 18% growth year-over-year and a 7% growth quarter-over- quarter. Net margin expanded by approximately 130 basis points quarter-over-quarter and 320 basis points year-over-year, reaching 29.7% in 2Q ’25. In our revenue mix for this quarter, higher secondary market activity compensated lower volumes on investment banking, impacting our effective tax rate. This translated into a new record high net income for a quarter with significant EPS growth. Let’s focus on earnings per share and ROE details over the next slides. Our diluted EPS in 2Q ’25 reached BRL 2.46 per share.

As we continue the execution of our share buyback program, canceling the respective shares acquired, the EPS growth pace was again faster than our net income growth. In the quarter, our diluted EPS posted 22% growth, while our net income grew 18%, both on a year-over-year basis. RoTE marked 30.1%, 209 basis points higher year-over-year. Our ROE grew on a yearly — on a quarterly basis, reaching 24.4%. This represents 230 basis points increase in comparison to the same quarter last year. These numbers I have just mentioned are important indicators that we keep generating consistent income returns to our shareholders. Finally, moving to capital management. As we have planned, we keep our target of distributing dividends and executing share buyback programs.

Combined, their volumes should be above 50% of net income for 2025 and ’26. We already have a share buyback program of BRL 1 billion to be executed until next year, and new announcements will be made according to the Board of Directors’ decision. Moving to the second part of capital management on the next slide. This is the last topic of my presentation. And we can see on the left-hand side that our BIS ratio in a very comfortable level of 20.1%. On the same rationale, our CET1 is at 18.5%, which is way higher than peers average is 12%. On the high-hand side of the slide, we can see that our total RWA to total asset ratio was 27%, which represents the third reduction in a row and 4% lower year-over-year. Total RWA remained steady quarter-over-quarter and grew 9.8% year-over-year, reaching BRL 101 billion.

As I said last quarter, RWA should grow at a moderate pace when compared to net income, and it was the case in this quarter since net income posted 18% growth year-over-year. As Maffra said before, the potential new tax regulation may change the DCM dynamics and therefore, impacting our willingness to warehouse more assets to distribute during the 4Q and 2026. It’s important to highlight that our VaR market 13 basis points of our equity or BRL 28 million, demonstrating our risk discipline since it was 4% lower year-over- year. And now we can go to the Q&A.

Andre Parize: Okay. We’re going to start our Q&A session. And the first question is from Eduardo Rosman from BTG.

Eduardo Rosman: My question here is on capital generation and dividends and buybacks, right? So just help us understand a little bit more your capital generation because it seems that you’ve been able to improve it this quarter. Actually, you are growing your capital base, I think, faster than your net income, right? So — but you’re still way below the level this year in the level of buybacks and dividends when compared to last year, right? So can we see an acceleration of that now in the second quarter? How do you see that? We see that you have this soft guidance of above 50% for 2025 and 2026. But can you please help us with more details?

Victor Andreu Mansur Farinassi: Thank you for your question. First, dividing the answer here in some parts. First one, as we anticipated, the net income would grow a bit faster than the RWA over this year, delivering some leverage in capital terms. And I think that was the case. Also, as you comment, we didn’t distribute as much of the net income as we generated over this quarter. The second part, we are still capturing a bit of leverage over the 496 new regulation. The benefits will be delivered over the year in the DRC and the market risk, principally in the credit spread risk inside of market risk. The second part will be delivered over the risk-weighted assets, operational risk. Also, we expect to see that over the next quarters.

Another part here, talking about the trend for the year. We expected to see the RWA growing slower than the net income. And the new tax regulation may change a bit the dynamics of the DCM market. And depending on how it goes, we may warehouse a bit faster than initially expected to take advantage of the demand from clients to issue before the regulation takes place in 2026. Even though we don’t expect any of those to impact our target team — our target to pay more than 50% of our profits this year because we still have a lot of spare capital. And remember here, our CET1 ratio is at 18% and the average of the industry is at 12%. So a lot of space. So we may announce the rest of the payout over the rest of the year. And the discussion between dividends and buybacks depend on the price of the stock, and we need to discuss that with our Board.

Andre Parize: Next question is from our Yuri Fernandes, JPMorgan.

Yuri Rocha Fernandes: I have a question regarding our corporate — like corporate lending strategy. I know it’s something for you. But you have been discussing new products, new strategies. And a question I have is if corporate lending matters for the entire ecosystem. When we go to your AUC, we see that the commercial is the — is the portion not growing as much actually and net new money is the same. So just trying to understand if you — how is your perception about corporate lending and if you believe this could be something that is missing for your ecosystem and your strategy?

Andre Parize: Could you repeat the question? We couldn’t hear in the beginning. Sorry about that.

Yuri Rocha Fernandes: No, let me stick closer to the mic here. So I would like to understand a little bit about corporate lending. If you believe corporate lending is important for your strategy overall.

Victor Andreu Mansur Farinassi: This is Victor. Thank you for the question. Our idea in corporate lending is the same as other products we originate to sell. You may see the corporate book growing, but everything that we put in, we expect to put out at the same moment in time. So the growth you see in the credit portfolio is exactly that. The portfolio grew hopefully BRL 3 billion, and that will go under a securitization and we’re going to sell those assets over the next quarters.

Yuri Rocha Fernandes: Thank you, Mr. Victor. But I don’t believe like being more or less active here, it’s could be more helpful for your operation.

Victor Andreu Mansur Farinassi: Yes. Yes, it could. But the same as capital markets, we have our risk appetite, and we are buying credit to sell or originate a security to sell. It occupies the same risk space. So we are not going to increase our portfolio over our risk appetite because of any other strategy because they use the same pocket.

Andre Parize: Okay. Next question is from Thiago Batista, UBS.

Thiago Bovolenta Batista: I have 2 questions. Maffra, in the beginning, you commented about the new initiatives to try to speed up the net new money on XP in the second half of the year. Can you give a little bit of more details about those initiatives? The second one about the guidance for next year. Are you still comfortable with the guidance that you gave, I would say, 2 or 3 years ago? If you look to consensus for this year on top line, consensus is something close to BRL 20 billion of top line. So to achieve the low end, you need to expand 14%, 14% next year. It seems still feasible, but I wanted to hear for you guys if the guidance for next year is still achievable.

Thiago Maffra: Thank you for the question, Thiago. The first question about net new money. As we mentioned on the presentation, we still see the BRL 20 billion per quarter in retail as a reasonable level for the next quarters. Of course, if we see a change in the macro environment, starting interest rate cuts or something like that, we should see the BRL 20 billion accelerating. But for now, that’s the level that we are comfortable. Of course, this quarter, it was a little bit tougher on SMBs and corporate lending, but — and corporate segment, but we are confident that the BRL 20 billion is — it’s a good stable level. How we get there? There are a lot of initiatives in the company. If you go back a few years, I would say that the main one was channel diversification.

Back in 2021, we only had one channel, what we call the B2B, the IFA channel. Today, we have the internal advisers. We have the RIA model. So if you look at the numbers today, more than half of the net new money is coming from the new channels. And we keep investing in increasing the number of internal advisers, the number of IFAs on our network. So expansion is one of the levers here. The second one, when you have a tougher environment and higher interest rates, competing with products, CGs from the banks, especially the tax-exempt ones, it’s not that easy. So all the time, we are like creating new products to compete with the banks. We just launched some new products here this quarter. They are performing very well. It’s a type of fund with senior tranche and it’s a Selic rate here and tax exempt.

So it’s a very good one. So we are all the time trying to create products to compete with the banks. And we do also partnership with some of the public banks and some other banks through auctions or through bilateral distribution. So all the time, we are trying to originate products. I would say the third one and probably the most short-term and effective tool here, it’s how we increase the productivity of our IFAs, okay? So we have been investing a lot of time, as I said on the first quarter helping the channel to increase productivity through technology, through sales management. We have some people in some of the operations, and we are seeing the numbers starting to pick up. And the last one, but it’s more like, I would say, medium term, we have been investing a lot on increasing the level of service, the way of serving our clients through financial planning, through wealth planning, succession, tax planning and so on.

We have created our own internal models. We have been training all the FAs. But I would say here is more like a medium term, especially on the current scenario where buying SCG at 15%, it’s probably a good option for some of the investors, and it’s harder to make them move to XP. But on the medium term and long term, for me, this is the biggest opportunity we have like increasing the way of serving in the market and creating a new level of servicing investing in Brazil. And the second question was guidance for next year. Yes. Yes, we are still pursuing the guidance for next year. Of course, right now, we are like pursuing the bottom of the guidance, okay? But we are still pursuing for this year, we believe that the number for revenue that we are pursuing is still around 10%.

Of course, you saw the numbers for the first half of the year. They are a little bit lower, 5.5% against 10%. But we are very confident that the numbers will accelerate on the second half and the growth rate will be higher on the second half than the first one.

Andre Parize: Okay. Next question is from Mario Pierry, Bank of America.

Mario Lucio S Pierry: Guys, can you give us a little bit more color on the — on inflows so far in the third quarter? Because again, it sounds as if you’re confident that you can return to this BRL 20 billion per quarter. Are you seeing — have you seen so far in the first half of this quarter, a number close to the level that you feel confidence? So that’s my first question. My second question is related to your EBT margin. Yes, it continues to improve. However, you are still below right, your medium-term guidance, and it seems like revenues are growing a little less than you anticipated even though you’re still maintaining the plus 10% for this year. Is there anything you can do on the cost side if the revenues don’t come through this year?

Thiago Maffra: Thank you so much for the question. We’ll take the first one. We cannot talk about the net new money for the quarter so far. But my answer for you will be we are confident in delivering the BRL 20 billion or around BRL 20 billion for the next quarters, as I mentioned before.

Victor Andreu Mansur Farinassi: Mario, taking the second part here about EBT and SG&A. First, talking about EBI. Our product — the EBT depends on the product mix, as we discussed it before and also the tax rate. And the trend in both of them should be trading around this quarter if the market keep the way it is. And talking about SG&A, we delivered a lot of reduction in the efficiency ratio over the last 2 years, almost 400 basis points. ;And since we keep investing in strategic areas as new advisers and technology and you name it, we may see the index more flattish over this year. And it’s valid to reinforce our commitment to cost control and efficiency even though, but we are not going to stop investing in our core because of a bit more of unpredictable levels of revenue coming from the wholesale banking side. As Maffra said, 2026, there is a lot of time to the end of 2026. And for now, we are comfortable with the levels.

Mario Lucio S Pierry: Okay. That’s clear. Let me rephrase the first question then. When we look at inflows during the second quarter, did you see an improving pattern throughout the quarter on a monthly basis? Are you seeing flows improving? Or do you see them improving in the quarter? Or is it relatively the same amount of inflows per month?

Thiago Maffra: Mario, I will give you the same answer that I gave before. I believe we can deliver the BRL 20 billion. If you get the last quarter, it was BRL 16 billion. I imagine that one customer or 2 could make the difference here. So billion. It’s the number here and around BRL 20 billion, it could be a little bit higher or a little bit lower, okay? But that’s the pace right now.

Operator: Next question is from Marcelo Mizrahi, BB.

Marcelo Mizrahi: So my question is regarding again about the corporate portfolio, which was a huge growth in a quarterly basis and not too much in a yearly basis. But just to understand what’s the trip of this credit, what’s happening exactly here? And looking forward, another question is regarding the net new money of the corporates. To understand if there are any new strategy here, if there are any news here to justify this net new money negative on the corporate side.

Victor Andreu Mansur Farinassi: Thank you for your question, Victor here. The first part Sorry, the first part about credit portfolio. As we said before, those are credit we originated to sell. So basically, those are operations we did with corporates and we originate receivables that will be securitized and then sold to our client base. That’s something that we did before over the other quarters, and it’s the same that we’re going to do again. So we expect to sell that. And talking about the corporate the new money, I think the problem here is the dynamics of the market. We are seeing — we begin to see that in the first quarter and then the trend intensified a bit in the second quarter. What we are seeing, the banks that give credit to the companies, they are asking for reciprocity in terms of investments to deliver some credit lines.

Since we are not in this business and we are not able to give the main product that is credit, we are seeing the money flow to banks that usually have some products as cash flows, anticipation of cards and et cetera. So that’s basically the case.

Andre Parize: Moving to the next question Tito Labarta from Goldman.

Daer Labarta: Firstly, just following up a little bit more on the revenue growth, right? I mean you’re maintaining the 10% for this year, around 10%. Maffra, you said it should accelerate in the second half of the year. If you break that down, right, retail growing 9% year-over-year. So that’s a big closer. I guess, first, do you think retail in and of itself will accelerate in the second half of the year? Or two, is it more the Issuer Services, the corporate and the other lines do you expect — I mean, those obviously should accelerate given the somewhat weak first half of the year. But just if we could break out between retail and other revenues and which lines can drive that revenue growth to [indiscernible].

Victor Andreu Mansur Farinassi: Tito, this is Victor. So basically, we can break that revenue growth between the first half of the year and the second half is 3 factors. The first one is very easy to explain. We have 6% more business days. So more business days, we have more trading days, more interest rates over capital and clients’ cash and also a higher Selic rate in the second half of the year against the first. That’s the first part of the explanation. The second one is the new verticals and new advisers. So basically, we keep hiring advisers, and we have a lot of products that are still in rollout and are growing a lot as international investments, consortium and other products in the new verticals portfolio. And the last one that is more volatile is the product mix.

If we have a second quarter, if a DCM that is stronger and more primary offering from funds, we may see a lift in retail revenues and also in issuer services revenues. So basically, those are the 3 components and why we are expecting to have higher revenues in the second half against the first.

Daer Labarta: Great. No, that’s helpful. Just one quick follow-up. Maybe on the fixed income revenues, which are still strong at 20% year-over-year, although it did fall a little bit in the quarter. I mean you mentioned higher rates. How do you think about — are you getting to sort of like the peak level on the fixed income? Or can that still continue to outpace the other segments just on a relative basis, how you see the fixed income revenue relative to [indiscernible] given the demand [indiscernible].

Victor Andreu Mansur Farinassi: Okay. Tito, I heard the first part of the question, but the second was a bit confusing here, but I will try to answer you. First, in fixed income, it’s important to mention that for retail clients, we are in the highest average Selic rate in almost 20 years. So we are in the highest level of the cycle. So in the perception of the clients, they never had interest rate — spot interest rates that’s as high as now. So why it is important to mention that? Because clients, they don’t go longer in duration when that happens, if this slope in the interest rate curve. So what we are seeing is increasing in volume, but a decreasing ROA given that duration profile. So when interest rate starts falling or the interest rate has a more normal shape, we may see the duration going higher again and the ROA increasing.

but that’s a bit of the dynamics of fixed income right now. And what can change that over the second half of the year is the DCM market and the primary offerings that may go to market if the pipeline goes as it is because of the new tax regulation. So a lot of primary offerings attract clients, and we may see they get longer in duration again. So basically, we expect the fixed income line to keep performance well. And depending on the primary market in DCM, we may see this number a bit higher.

Andre Parize: Next question is from Siraj from Citi.

Arnon Orzes Shirazi: I have 2 questions here. My first one is related to nonpeople-related expenses. We saw a 38% year-on-year increase. I know that it was explained by marketing and also technology, but it seemed a little bit too much for me. And also, the second one is related to tax how the tax increase, especially on offshore funds has been involved? And what drove the positive income tax rate for this quarter?

Victor Andreu Mansur Farinassi: Okay. Thank you for your question. First here, talking about SG&A. We had a lot of investments in marketing. We had some events that are the first time that we’re doing the size that we did. We had the B2B experience event for all our IFAs network outside of Brazil, where we announced some important measures for the year. And second is the GAF. It’s an agribusiness event here in Brazil that we sponsored, and it’s very important to us because we get closer to the clients that issue tax-exempt notes, corporations that are able to issue tax-exempt notes. Also investments in markets to get our reputation a bit more stronger and more visible over all brands and newspapers and et cetera. In terms of technology, it’s one of events that we did in terms of cloud and other kinds of tech.

Talking about the trend over the year, keep in mind the next quarter, we have our main event of the year, the expert. So also another quarter if no people expenses that are higher than comparison quarter-over-quarter. Moving to tax rates. I think we talked in a few opportunities that given the dynamic of the market and the product mix, if the market making activity and secondary market a bit more stronger than investment banking and broker-dealer revenues that our tax rate should be trading around 15%, and that was basically the case. Now we closed 14 something over the last 12 months. And if the product mix keep the way it is, that’s the number that we may see over the year.

Arnon Orzes Shirazi: But as related to offshore tax, the potential increase, what thoughts?

Victor Andreu Mansur Farinassi: Okay. Perfect. I think as any other financial institution in Brazil, there is a lot of ways to plan our tax structure, and we are confident that the impact will be marginal in your business.

Andre Parize: Next question is from Neha Agarwala from HSBC.

Neha Agarwala: Just once again, sorry to go back to this, but the corporate net new money was significantly weak versus what we seen in the previous quarters. I understand the volatility, but anything specific this quarter that led to this big decline compared to previous quarter? And should we expect more of that next quarter? Or was this like a one-off trend with some one-off moves? And my second question is, you talked a bit about the fee-based model and that’s only 5% of your AUC and that’s been growing. Can you talk a bit more about what impact we could see from that on your take rate, if any?

Victor Andreu Mansur Farinassi: Okay. Thank you, Neha. I will take the first one. I think the corporate dynamics is a bit there what I said. If the banks that give credit to their clients keep asking for investments in terms of reciprocity, we may suffer a bit more in the 3Q or 4Q since we end up going to this business. But also, it’s important to remember that the ROA of this money is extremely low. So the impact in revenues to losing that money, they are not relevant. But it’s very hard to predict what we are going to see over the next quarters, as you say, these are more volatile cash.

Thiago Maffra: This is Thiiago. Thank you for your question. I will take the second part. When we think about fee-based model, I believe there is an evolution about the model in Brazil. If we get the U.S. market, for example, today, if you look in terms of AUC, it’s 70-30, but in terms of revenues, it’s more like 50-50, okay? In Brazil, as I mentioned, it’s still very small, okay, but it’s growing. As I mentioned in the presentation, today, we are prepared for — to offer to our clients any kind of model, consultancy, fee-based, IFA model, transactional based model, we can serve our clients in different ways and charge in different ways, okay? So we are agnostic and we offer what’s best for our clients. What we expect for the next years, as I mentioned at the beginning of the year, this year was to grow, I would say, from 3%, 4% to 7%, 8%, okay?

So it’s growing. And — but it’s going to be a long journey here. It’s not going to happen like one day to the other, but we will grow. And again, we are the best platform to offer all the models to our clients. And we believe being agnostic to models is a real differentiation to serve our clients better. But thinking about revenues, if you look only the take rate, it goes down a little bit, not a lot, but it goes down, okay? But usually, it comes with a higher share of wallet. So usually, when we start to serve a client through a fee- based model or through consolidation of funds outside of XP. Usually, the AUC or the wallet or all the money that we oversee it’s not 100% here because today, we offer that model. We can consolidate what’s outside of XP.

Usually, you make more money or I would say, equal money in terms of revenue because you increase the size of the wallet, okay? So I would say if in the next quarters or years, we’ll start to see the take rate going a little bit down, but at a very slow pace, but the share of wallet per client will increase and we will compensate the lower take rate.

Andre Parize: Okay. Next question is from Pedro Leduc from BBA. Leduc, you may proceed.

Pedro Leduc: Okay. Good evening, everyone. I would like to explore the gross margin little bit more expanded Q-on-Q when I try to look at the moving pieces here. IFA commission incentives get nicely diluted. So I was trying to dig into this trend a little bit more, what drove it, if it was related to maybe the lower pace of net new money or the mix of your revenue movements, more equities less fixed income trying to get a sense of what is driving this gross margin expansion and how to think about it in the second half?

Victor Andreu Mansur Farinassi: Thank you for your question. I think here First, talking about some events. As we said before, the expected credit losses should be trading a bit lower than last quarter, and that trend should remain like that around BRL 90 million to BRL 100 million. And the second point was a bit higher than average sales tax, and that should go back to the average and I expect the number to go — to be as high as that. And the margin should go as normalizing when you look in the last 12 months. Yes. And the channel mix is also important to mention as the internal sales force keep growing, but also, that’s a trend that we’re going to see improving over quarters. But if you look at the last 12 months, that’s the pace that should be expecting for the rest of the year.

Andre Parize: Next question is from Daniel Vaz from Banco Safra.

Daniel Vaz: In recent opportunities, you mentioned that the B2C productivity has been much stronger than the B2B, right? So the B2C has been a large focus recently, and you standardized probably an approach for selling and for the sales team, right? So it seems more well structured right now. When it comes to the B2B, I think the productivity has deteriorated like over the years. So I want to hear from you first, if you’re seeing net outflows from this channel from the B2B? And secondly, if you could tell us a bit your diagnostic right on the B2B channel, if you need a higher focus right now to maybe refresh or review this model. So this has been in the press recently regarding M&As on the advisory offices, a lot of mandates. It would be good to hear from you the diagnostic.

Thiago Maffra: Thank you for the question. As we have said in the past, for us, it’s not one channel or the other. We believe in having multiple channels for different reasons. But when we look at the B2B, the B2B channel specifically, as you mentioned, the productivity was very low. It’s still low when compared like to 2 years ago, 1.5 years or more ago. But it’s getting back. It’s improving bit by bit. It’s not going to change a lot from one quarter to the other, but it’s improving. So everything that we have been done, a lot of efforts and energy that we have put on the channel since last — the end of last year and more specifically at the beginning of this year, it’s paying off, and we are starting to see the performance of B2B channel improving. So that’s why we are confident on the BRL 20 billion, okay?

Daniel Vaz: Okay. So just a follow-up. So a refresh or a review in this — the way you operate in this model, right, as you did in B2C.

Thiago Maffra: Well, it’s just normal evolution. You have like to evolve the model. We just announced back in on the B2B experience, the big event that we do annually for the B2B channel. This year was in Mendoza, and we announced some change on the way of serving clients. So I would say minimal standards of serving our clients. So location, number and ways, points of contact with the customers. And so I would say more like a franchisee model where we have minimal standards, and we just announced that like 2 months ago. So it’s an evolution. It’s not like a big change.

Andre Parize: Okay. We are out of time. So in the name of the company, I’d like to thank you all for participating on our second quarter 2025 earnings call. Any further questions will be more than welcome. Just look for the IR team, and we keep in touch and see you soon. Thank you very much.