XP Inc. (NASDAQ:XP) Q3 2023 Earnings Call Transcript
XP Inc. (NASDAQ:XP) Q3 2023 Earnings Call Transcript November 13, 2023
Antonio Guimaraes: Good evening, everyone. I'm Antonio Guimaraes, Investor Relations at XP. It is a pleasure to be here with you today. On behalf of the company, I'd like to thank you all for the interest and welcome you to the 2023 third quarter's earnings call. This quarter, we had a strong set of results, which will be presented by our CEO, Thiago Maffra, and our CFO, Bruno Constantino, who will also be both available for the Q&A session right after the presentation. [Operator Instructions] And before we begin our presentation, please refer to our legal disclaimers on page two, on which we clarify forward-looking statements. Additional information on forward-looking statements can be found on the SEC Filings section of the IR website. So now I'll turn it over to Thiago Maffra. Good evening, Maffra.
Thiago Maffra: Thanks, Antonio. Good evening, everyone. Thank you for joining us today on our 2023 third quarter earnings call. It's a pleasure to be here with you tonight. I will start with a brief introduction to this quarter's highlights and key updates. In the third quarter of 2023, we had a strong quarter with increased top line growth and profitability across different metrics. This quarter despite the tough macroeconomic conditions that led to weaker organic net new money, we ended the quarter with BRL1.1 trillion in client assets, reaching all-time high records in most of our investment KPIs. For this quarter, as a result of our continuous focus in executing our strategy, we achieved the highest net income in our history at BRL1.1 billion, up 11% quarter-over-quarter and 5% year-over-year.
Our discipline in cost control has reflected in the best efficiency ratio in the last three years at 37.3%, down more than 400 bps year-over-year and 100 bps quarter-over-quarter. As a result of our efforts, ROE rose 58 bps quarter-over-quarter, reaching 22.6%, the highest during the year. And last but not least, our diluted earnings per share increased 7% quarter-over-quarter to BRL1.96 also the highest in our history. Moving to the next slide, I want to reinforce our three focus points. First, leadership investments by protecting and expanding our core business. In this quarter, we have incorporated Modal's financials and operations which should be fully integrated in 2024. At the same time, we have reached an all-time high in different investment KPIs, enhancing our capacity to reap the benefits of our leadership position, hand-in-hand with more positive market conditions.
Second, superior product offering translated into the continuous improvement of our new verticals performance. New Verticals revenue grew three times in the last two years and now represents 11% of our total last 12 months revenue. We are certain that expanding the product offering into new verticals was the right decision, enabling us to diversify our revenues and deliver growth even in a tough environment for the investment market. This evolution confirms our initial thesis of the importance of having client investments first. For example, in credit cards, we estimate we have 50% of principality out of our total cardholders base. This is a clear example of many opportunities we will explore ahead in the proper time. Lastly, client focus, high quality and excellence in everything we deliver is a key pillar to achieve our long-term goals.
We remain focused on that maintaining the NPS above 70 at the top of the industry once again this quarter. High NPS directly translates into high share of wallet, and we see this consistently in our client base. High NPS directly translates into high share of wallet and we see this consistently in our client base. Our strategy is centered and providing advisers with the best tools, technology and products so they can better serve our clients. In this direction, we have evolved our incentive plans to advisers providing them with more intelligent models and systems in order to improve clients' asset allocation, resulting in superior experience for retail investors. Moving to the next slide. As I mentioned earlier, we are happy to see improved profitability in our financial results for the quarter while we have made progress on Modal's integration.
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