XP Inc. (XP) Earnings Call Transcript & Summary

[Presentation] [Interpreted] Good morning. We are starting the Investor Day by XP 2021. I am André Martins, responsible for investors affairs. And then on everybody's behalf, I would like to thank for -- thank you for the interest and participating in our event. It is the first time since our IPO that we have done -- doing this with this format with our main leaders, so this is a very timely moment for us to discuss our purpose, culture, strategic planning, among other subjects. You will be able to ask questions towards the end, so if you feel that a topic was not discussed, please feel free to send in the questions. It's important to say that we are going to have 2 sessions; the first one, starting at 10 a.m. Brazilian time, 8 a.m. EST, the business sector. So the Q&A right after that will be related to that. And in the second block, we will then have more financial topics, and there will be a dedicated Q&A right after the second session. It's important to say that the event is being transmitted into English and Portuguese, so according to the link that you use, you will listen to one or the other language. [Foreign Language] to Portuguese; [ and it was thought it was ] important to give this note for people who, by mistake, maybe came in to the wrong link. You can ask the questions in Slido on YouTube's [ screen ]. Once again, thank you very much. I'm now going to introduce our leaders who are present, from the left to right: Guilherme Dias Benchimol, Founder and Chairman of the Board; Thiago Maffra, our CEO since May 2021; José Berenguer; Guilherme Sant'Anna, our commercial director in charge of the channels growth, et cetera; and finally, Bruno Constantino, our CFO. They will be here with us for questions and answers in the end. It's going to be a very productive discussion. Starting with Guilherme. Good morning, Guilherme. You founded the company 20 years ago, a huge opportunity of improving people's lives. So in these 20 years -- it's difficult to talk about 20 years in a very short period of time. What do you think are the main merits and learnings in this entrepreneur journey?

[Interpreted] Hi, André. Hi, everyone. It is a pleasure to be here. I hope you like the event -- going to start with an [ interim ]. And then here my partners are going to go deeper into the actual [ conversation ]. So I would say, André, that -- my biggest merit in 20 years [ of ] company, I would say they are 2. The first one was learning how to have an actual partnership. When I started the company, it was only [ mine ], and then I started understanding that building a company of owners and aligning people throughout the time makes a huge difference. When you're an owner, you have no alternative [ in life ] that is different from doing better and better. When you're an executive -- of course, some [ are brilliant ], but you can always change jobs. So this learning was important. The second thing was learning to dream big. Life is very brief and you need to find something that makes your life more worthwhile. Dreaming is easy. Making a plan is slightly more difficult but -- really [ difficult just to execute ] on a daily basis, but when you learn how to share your dream [ and align ] people and you learn how to dream big and you get there, that [ indeed is the thing ] and makes your life [ truly ] worthwhile. So I would say that these were the 2 things that were very important. Moving forward, on the why [indiscernible] the company always wanted to transform the financial market and improve people's lives. [ The last years ], we advanced even more. We went into other verticals, insurance [indiscernible] et cetera; and we thought that our why should evolve as well. You will learn, you will listen to that more and more, improving people's lives. I would also say that I learned that at home. When you do good, good comes back to you twofold. So it's important for people who work with us to understand that XP exists because it really wants to improve people's lives, help them invest better and have access to information that will help them out, among other things that we do and we aim for. As an entrepreneur [indiscernible] for you to start having some success in your life, and then you start wanting to diversify [indiscernible] then you start wanting to bet in other things. We don't believe in that [indiscernible]. We are a focused entrepreneur. We don't have another business. I don't have any other company. I only invest in XP. My only business is this. And here my partners and the other partners that were otherwise engaged believe in the same thing. We believe in a concentrated entrepreneur. We don't believe in diversified entrepreneur. XP is [indiscernible]. And I'd say that, that is the basic foundation, right, being focused, being passionate. These are the ingredients that help you really transform an entire industry. We believe that it was more important [indiscernible]. [ A lot of us have an urge ], have a tendency to think that, that [indiscernible] that the business is the most important one. We think that the most important one is the people, [ the partners or ] -- so having science and data, but when you find the right people and put them into the right positions, learn to align people throughout time, align them with you, demand [indiscernible], also learn how to fire sometimes or promote somebody at the end of the day, that is what extracts the best in everyone and makes the impossible possible. In XP, we are focused [ with people ]. And there are no superheroes here. We don't believe that. We believe in super teams. Our focus is people, culture, [ process ]. And this is what creates super teams. [ They can improve ] further and further. And meritocracy in our company. How do we find our talent? How do we [ put clients ] to meet people who deliver performance, who makes magic, right? We use a lot of that. We like people who know how to do the magic in the right way. The right way has to do with our culture. We have 4 themes in our culture: client centric, dream big, open minded and entrepreneurial spirit. [ So we want to do ] everything to always [indiscernible] clients, [ be them in higher offices or -- and ] clients, et cetera. These are people who dream big; people who do not believe that there is an impossible; people that are always raising the bar, building bridges with an open mind; people who don't mind making mistakes but correcting them quicker; people who are humble, always learning, evolving; and finally, with an entrepreneurial spirit, people who are empowered by the mistakes that bring solutions. [ Different ] culture. So being successful in the company, finding more space, having more partners and bigger bonus is the result of performance and also having this behavior. It's worthless to have one or the other. You have to have both of those [indiscernible]. And finally, I'd say that [ in our vision ] [indiscernible]. It's really about [indiscernible]. These are the 3 things that build value for the shareholder in the long run. It's doing -- generating more and more revenue; controlling expenses; and delivering more and more quality to the clients, whoever they are. In XP, we believe in these 3 things. We believe that breaking records in these 3 things, in the long run, is what is going to generate more and more value to the [ shareholder base ]. The challenge is to do that in the right order. We [ really ] believe in finding the low-hanging fruit, taking [ step one then two ]; and leaving the high-hanging fruit for later. So finding the sequence focused on these 3 things is one thing we do well, and we intend to keep on doing well and more and more. I'm going to invite Maffra. Maffra took over as the CEO. It's been 6 months. It was a reason of pride, to pass on my position to him. I had been CEO for more than 20 years. Surely, Maffra is going to lead the company with a vision of the future much better than myself. I think I was a good CEO, but you know that saying that, if a team is winning, you don't change around the players. [ I think ] we don't really believe that. We do change around our team. Maffra has already changed quite a lot. The company is better than before; and it's very good to see more focus on long term, [ with some ] focus on the short term. It complements each other together with our team. So Maffra, you have the floor.

[Interpreted] Thank you, Guilherme. Thank you, everyone. [ How is life ] [indiscernible]? It is a pleasure to be participating in our first Investor Day after 2 years that we made an anniversary of [ us being ] listed. It is a pleasure [ to speak and seeing you today ]. I would like to start talking about what my priorities have been in the first 6 months. These are priorities that are very much aligned to everything that Guilherme shared. These are priorities that all our executives, our partners who are here by my side -- everybody is focused on this. We believe that it really makes the difference. And I think Guilherme has already mentioned a little bit about the importance of culture, teamwork. We can say that in XP we don't have 1 CEO. We have 6,500 CEOs. Everybody here is the CEO. I'm not the one leading the company by myself. It wasn't Guilherme who did it. We really have this team spirit because we believe that teams that are competent, [ united and ] with the right incentives are the ones that make a difference in the long run, so I have been very much focused on 3 priorities: people, strategies and the management. And management, please understand execution as well. When I talk about people, I am basically talking in a broad way, several pillars. I'm talking about meritocracy. I'm talking about culture. I'm talking about long-run incentives. We truly believe that people are the ones who make a difference in the company. [ For several years ], I've been asked, "What is [ your bigger ] challenge as the CTO and now CEO?" And I say the challenge is always the same, people. How do we guarantee that we have the [ best people ] sitting on the right seats with the right incentives, aligned to our culture? We really believe that culture is the glue that brings everybody together and keeps everybody together. [ And on value ] is the how, how we are going to [indiscernible] [ to get there. With strategy ]. With -- I'm not [indiscernible] a lot [ and have business ] [indiscernible] investments as our only pillar in the company. And [ 2 ] years ago, we have been evolving a lot [indiscernible]. The third one, [ management, execution ]. The company has grown amazingly in the last few years. We've doubled our size [indiscernible]. [ We have management in the company ] that is getting bigger and bigger due to the new lines of business. We have been evolving our management [indiscernible]. We have been building what we call XP's management system, where we focus on a management model to be able to guarantee the execution of all of these projects that we will share with you. This has always been one of our biggest qualities. We've always been capable of executing very much above average, of capability of -- unique capability of execution. And that is because we have the best people that are well aligned. They have an owner mindset, and that is what makes a difference in XP. I think Guilherme mentioned another thing that is very important to reinforce. We believe that we need passionate people, people who understand [indiscernible] [ but XP versus ] [indiscernible]. XP is a life project. In the long run, all of us in the next 10, 20, 30 years, we will still be here. We're not an executive then -- in 5 years from now are going to change jobs or go to another project. This is a single project. We don't have plan b. This is our life and we do this out of love. We do this [ because we truly ] believe in our purpose. So we talk a lot about that in XP. When we hired someone, we hired future partners, our partners. We don't hire employees. We believe that everybody here has the potential to become a partner. And since the beginning, they think as an owner. That is what makes the difference in XP. Now going into the strategy of new business. Our entry video shows that, our opening video. We made [ 20 years this year ] [indiscernible] very much focused in investments. We believe that [indiscernible]. [ What's the ] differential when we think of investments? We think of a pyramid. We like to [indiscernible] investments that is the tip of the pyramid. You really need to conquer the [ credibility of your client ]. That's not easy. That's not something that you do overnight -- [ and for health, family ]. I will say that money [ is the third most important thing ] in people's lives because it's not always money. Money is the dream. It's a dream [ they can do to buy a house ]. It could be having financial stability and sending your kids to college. So behind that investment, there is [indiscernible]. That is how we see it. That is how we take care of people's monies and people's investments. We are taking care of their dreams. And when you come in through investment, you have [ high-revenue ] clients that [ trusts you ] and have [indiscernible]. And then you bring it down by [indiscernible], bring them down and [indiscernible] [ variety and target ] [indiscernible]. So we believe that it is really [ the differentiated position ]. And in the last few years, we have been expanding our product offer. I'd like to think of 4 verticals: banking, credit, insurance and companies. This is how we see, [ these new ] verticals that we're going [indiscernible]. When we look at the market, the total addressable market in Brazil that we [ consider addressable ], we see [ BRL 8 billion earlier. We add in ] 100 billion to 120 billion of revenue [indiscernible]. If we look at the slide, this is 7 billion of investments. We have other [ business lines such as investments, banking and so on, asset management ], but today we [ add from 100 billion to 120 billion ] when we look at these 4 new verticals that we're going to; expand our addressable markets to BRL 500 billion in revenue [indiscernible] [ 36 months ], which is the plan for these verticals [indiscernible]. So we are going to really advance in each one of those in the next few years. When we talk about banking, we're talking about [ transaction on ] credit cards, checking accounts. When we look at what we did in terms of cards in the first 8 or 10 months that we launched our card, it is really something very surprising. In the next few months, we're going to be in the top 10 players of cards in Brazil, and our card is not yet available for all clients. We're going to start expanding our penetration in our [ clientele ] for the next months. This month, we opened for XP clients [ over 5,000 ] [indiscernible]. There's -- so there's [indiscernible]. When we talk of credit, it's the same. We started a year ago. Today, we have [ low ] [indiscernible] low [indiscernible] credit. We have 0 NPL currently in our credit portfolio. [ The idea is to ] keep on advancing; as Guilherme said, low-hanging fruit of credit with lower risk that have [ in effect more ] synergies with our current clients. We don't want [ to go to be open fee ] and offer premium credit, that kind of thing. We're going to keep on advancing with low-risk credit, [ low-capital new ] credit. We don't want to be a company that keeps on piling up credit in our balance sheet [indiscernible]. [ José is going to go deeper into this thing ]. And insurance. Insurance was something we didn't used to have the next -- [ 2, 3 ] years ago. Our insurance company has less than 2 years. Today, we are leading [ for its abilities ] of pension, of life insurance that didn't exist. And so it is a revenue line that we're going to hear about today with you that didn't use to exist and it's ramping up really quickly. [indiscernible] a lot higher or a lot higher than we have in our more mature lines of business. And when we think of companies, we see [ a transformation ] happening [indiscernible] so a huge transformation when it comes to individuals, but this transformation did not happen in the legal entities or in companies [indiscernible], so we see the offer of services, products and experience in the legal entities or companies 10 years late, if compared to what happened [indiscernible]. If we see today, the little -- the rates that you have today from companies [indiscernible] [ with bad product ] as simple as [ they picks ] just for free for individuals or legal entities [indiscernible]. [ Therefore, we ] believe that there is a huge transformation [ that's yet ] to happen in this market. And we are diving head first into the corporate market because we really want [ to do it from the ] difference. And we believe that in these 4 new verticals we are able [ to do a transformation ] with -- differently with better services and products that transform these core markets that we did invest. This is more challenge for the next year. And it's also very important to mention Guilherme when he talked about the tripod, revenue, cost and quality. This is something that is very strongly [indiscernible] internally. We really believe that. We're an entrepreneur. And even considering XP's background, we didn't start [indiscernible]. We didn't start having investors, so we had to build the business, making money to reinvest and to grow, [ then decide ] that we like to manage the company. We like to go into new businesses that we're able to monetize. Obviously we need to invest, first, to grow, but we are very well grounded. I'm always speaking for the low-hanging fruit, monetizing and then [ going for ] the new business. That is the mindset that we have here in XP. And to wrap up. We were only able to advance in these [ new ] fronts because we started the transformation in the company 3 or 4 years ago. We are not a company that was born digital, but we have been transforming in that area, and today I can affirm we're a technology company. We are a digital company. We have been doing this transformation in the last 3 or 4 years, invest heavily in technology and reorganize the company. This year, we are giving yet another step forward. Transformation starts with [ squads ] involving product design, technology. In this year, we started advancing, and we're going to advance even faster now in a nimble and [ available ] transformation. And we're going to have several business units [ that's more autonomous ] and more and more -- closer to the client. [ And therefore, we'll have ] a more nimble, more decentralized company. And the goal with that is that -- we believe that an important competitive advantage in the long run for the company is its capacity of adaptation, its capacity of reinventing itself, adapting to the clients' needs, pivoting the business model if necessary throughout the years. So we want to have this agile company. And very soon, we're going to go into more details of what I said, but I think my message just to close here my opening remarks is that this is just the beginning. And the numbers clearly show that [ we have a huge ] opportunity in Brazil. The banking concentration in Brazil is the highest among several countries in the world. We still have -- 90% of the revenues in the biggest Brazilian banks -- investments are still in the biggest Brazilian banks, so here we really do have a blue, beautiful sea of expansion. And this is just the beginning of our journey. Very well. I'm going to give the floor to José, who's going to talk a little bit deeper about banking.

[Interpreted] I'm sorry to interrupt. Maffra made a very interesting connection with people and transformation. We have 2 leaders connecting remotely. I didn't mention their names in the beginning because -- well, we do have Gabriel Leal, a [ reference ] partner here in XP. Today, he is a people and management director. And Renato Cunha. He is also innovation and strategy. We now see them online. Good morning, Leal. Good morning, Cunha.

[Interpreted] Hi, guys.

[Interpreted] We hear you well, perfect. And now giving the floor to Leal. Maffra was making a connection with people, management. Guilherme said that the heart of the company are the people. Gabriel, you have a challenge. You have a lot of years in XP, a company that grows, as we said, [ and go then ] to different markets. And it's in an industry also that evolves on a daily basis. How do we guarantee that the company remains focused and efficient around and towards the same goal?

[Interpreted] Thank you, André. Good morning to everyone. We have our XP [ newer ] model. Maffra as well as Guilherme mentioned several challenges that the company is facing more and more as we scale up after several years deep in the commercial areas of the company and now leading people and management. I always like to connect these 2 things, people and management. So if you have a group of people, but you -- if you don't have a method, a system, a management methodology, then that group of people, it's just a group of people that are -- have nowhere to go, no focus [indiscernible]. But if you have a management area but you don't have people, it's the same as having theory but that doesn't change anything in practice. So I believe that building a company that has these pillars of people and management and very connected pillars creates a competitive advantage. And basically the combination of these 2 topics is [indiscernible] [ 2 ] small, 2 main challenges. More and more if companies want to reach higher levels, they will have to face them. Number one, scaling up the company. You are aware of our growth track record. It is surprising. And there is no doubt that we want to continue scaling up and, at this speed and at this magnitude, protecting our core business and at the same time going into new verticals. We're going to talk a lot about this. Maffra has said something about this [ in background, but it's ] scaling up the company within the concept of protection and evolution of our core and going into new verticals and doing that with a combination, a huge combination, in the company. Top line growth with bottom line growth is a combination that is simultaneously we have delivered. We have a delivery of the results. And this is the first aspect that we're -- here, scalable growth, profitability, protecting our business and at the same time going into new verticals. All of this [indiscernible] a service company, [ as people as the same ] asset doing this, scaling up the company with growth, profitability, connecting people. This is our main challenge and the challenge of all of the companies that want to have this growth [ base ], as we do have [indiscernible] in our addressable market. Our market share is still low when compared to all of our potential. So how are we going to do this using the [indiscernible] management system? [indiscernible] in the company [ a ] management system that connects 3 dots: strategy, execution and people. Maffra said that this is within his priorities and within the priorities of the executive committee [indiscernible] of the strategy over time is getting clearer, but how do we do this? We have [ a familiar ] vision and the [ pulse ], and we want to have the low-hanging fruit, as we like to say, first; and then after that, the other ones, doing this with [indiscernible] and intelligence and performance. And that's based on efficiency and constant need to have growth aligned to vision where [indiscernible] the best quality possible. And over time, that was [ the -- a huge positive ] differential so that you can earn new businesses so that you can fund the company's entrepreneurship [ using your verticals ]; above all, for you being able to find more competitive prices for your end customer. This view of intelligence and performance is essential, and it is always connected in [indiscernible]. And then finally, the third pillar which includes execution. And as Guilherme commented, it connects the long-term vision. And this is closely related to the [indiscernible] and incentives [ payment ] we want to be able to make and the rewards we want all of our internal teams to have, those who are developing [ life projects with us ]. Without the right incentives, you cannot develop something solid over time. We have an amazing track record. Our partnership is extremely consolidated. It has evolved and transformed over the past 20 years since Guilherme started the company. And I remember that Guilherme said that the company has evolved 100% into data company. [ It's listed with ] [indiscernible] external partners, internal partners. So this is something that we developed over time. [indiscernible] company is a group of strong people with aligned interests which are all well defined with a long-term [ vision ]. The [indiscernible] you can see on the screen connects everything [indiscernible] management in terms of priorities, execution, strategies. And then in the core, we have people. Those who follow up our history know that we want to have the best people in the right place [ always ]. And then the challenge is attract talents, retention of these talents and challenge these talents with the right purposes. This is part of our management system, which is [ only ] method for us to reach our targets. So this is how we are [ consequently going to ] achieve our results [ progressing ] markets and, above all, [ disseminating ] our culture. So this is another bit of what we have seen about [indiscernible] management. [ Guilherme ] said in the beginning -- and I spent a lot of time in my life heading the business areas. We have our clients. We want to serve them well. And of course, that's a wonderful business [ leverage ], but behind it all, perhaps the main one is a strong [ leverage ]. And the company is dedicated to making this long-term dream come true.

[Interpreted] Thank you very much. This is a very important topic. And the way the company is [ growing this day ], we ask ourselves about that all of the time. [ Our contracts ] have this capacity. And we want to know how you direct people and advise them. This is very important. And now linking this with Renato, our strategy and innovation director at XP, and linking what Leal said to data and technology. [ It have ] a transformation process which is ongoing. What are the initiatives in the company that will guarantee processes [ agility and ] scale?

[Interpreted] Well, just to make this link: Transformation is a topic which is used in different ways nowadays. We have an opportunity to demystify it and to show you how pragmatic this transformation process is. It's an ongoing process. It started in the past with Maffra and is ongoing, but what is the context? Why are we undergoing transformation? We understand that our clients are more and more demanding their preferences. They indicate what they need, expectation. [ I found ] also we are in an industry which is very dynamic. And so when we talk about all of the verticals we work with, we know that we have business models that start -- that are born and die all the time at XP. [ We have a position ] and we are undergoing continued transforming. Why do we do this? We want to guarantee adaptability. We want our business to be able to move on. And at the same time, we do not want to lose our DNA, which is to generate value for our clients and doing this in the long term with them. Once again, it is a continued process which started 3 or 4 years ago. We've taken it to another level. So what are the most important aspects that we have invested in so that we can truly do this and then make the company more resilient, adaptable? Well, number one, [ we believe ] in the vision of having smaller [indiscernible] teams. They must be empowered and close to the clients and must be able to deliver their services. This is perhaps the most important concept that [ we want to implement Maffra and the CTO change ] part of this transformation in the world of technology and technology specialties. And now in the last cycles, we've taken it to another level. We are disseminating it throughout the whole company, although we can implement [indiscernible]. My dream for the upcoming months is that, whenever -- when employee ask us [indiscernible] what area we work in, we will not say, "I work with data, marketing or software engineering." That person will say, "My mission is improving [ the stock ] for my client or improving the experience for my client," regardless of the area. That's very powerful. We dream of having these empowered teams with the mission to do the best always. We are accelerating our pace. And the second factor, which is also very important, is that since 2018 we have multiplied our investments in -- 5x or 6x [indiscernible] as the backbone and, number one, for us to be able to have these investments so that we can deliver products and services, improving our services and also combined with client expectations. So what -- to have [indiscernible]. We will do this better as we invest in technologies, as the [ teams ] are automated, as we include more intelligence in this journey, be it for our internal or external clients. This is another important pillar whenever we talk about transformation. And then finally [indiscernible] and we have Leal, clearly management [indiscernible]. People are our main asset in the company, people and our culture, which [indiscernible] the last thing [indiscernible]. The transformation we are going through is for [indiscernible] CEOs who are conducting this and having doing [ this whole ] for a while [indiscernible]. [ For us securing too that ] this will happen [ in the best way possible ], we are making massive investments [indiscernible], trying to promote, develop our activities that are importing for this new model and the new technology models. Sometimes when we talk about digital transformation, I always say that it shouldn't be digital. It should be more holistic. And by the way, we're investing a lot in technology, data and so on and so forth, so we have been monitoring our results. And our expectation is that we will be able to improve our clients' [indiscernible] [ indicators, also ] [indiscernible] working with smaller and empowered teams which are cross-functional [ with ] high-value missions. We want to attract and retain the best talents in the market, continue growing; and have a lot of opportunities and new businesses and many challenges, so we're trying to provide the support [ of these activities ]. And there is also [ the issue of ] efficiency. When we start developing these [ many ] start-ups with the smaller teams, we end up optimizing the way [ the proposals will act ], and so we are pursuing these visions towards efficiency. And at the end of the day, we will have an impact on different indicators such as business resilience, among others. [ This is the ] overall panorama in what we understand as the company's transformation.

[Interpreted] Excellent, Cunha. Thank you very much. [ In a presentation ], I said that it was going to be [ André ] with the investors [indiscernible], but now we have a mission to improve relationships with investors, with credibility. And Cunha is -- has actually made a very appropriate comment. We've talked about the history of your company. We're heading to the new markets. Leal and Cunha clearly talked about transformation and how the company is organized so that we can have exponential growth in the long term. One of the main competitive advantages in the company are our distribution channels when we talk about retail. [indiscernible] we are talking about digital advisory, and so I wanted to include Guilherme Sant'Anna, who is responsible for the different channels. Of course, our commitment, Sant'Anna, is to offer the best experience regardless of the channel because the client will choose at the end of the day. Could you discuss the importance of these 2 channels and how you expect them to interact? And what are the priorities in this area in XP?

[Interpreted] Well, thank you very much. Good morning, everyone, my partners and those who are watching us. Before I start talking, I would like to reinforce Maffra's and Guilherme's message. This is only the beginning. [ Today ], we have the evolution, the distribution of channels in the market; [ and in some that ] competition has been saturated, that there are so many opportunities, that our market shares are still low. In our core business, it is almost 90% and is still concentrated in the traditional areas, including banks. Our market share is lower in other areas, so there is a huge potential for us to continue growing. I think that the different channels and their role in this process include 4 pillars, route, intelligence and teams and people, so we want to have channels which will meet our clients, including direct channels, indirect channels, our partners, including consultancy models, advisory, resource management. We're going to have a full portfolio to meet the needs of different clients. And then how can we reach all of Brazil? Because today we are concentrated in the capital cities. We want to go to areas we haven't been yet with our brand or model and our advisory. There's a lot for us to [ go ] in Brazil: intelligence. How can we provide tools that will scale up advisory in Brazil? We know our clients well. And it's important to make this relationship [ part good ], reducing operational time, increasing time that will generate [indiscernible]. We have invested a lot in platforms and apps, CRM to improve this intelligence; and people, training people who share the same culture, people who come from other companies and were not happy there. They are familiar with our culture. They're happy with us. They want to innovate with us, apply their ideas, experiment other types of long-term relationships with our clients. Guilherme always talks about this. [ We do not have any transaction or relationship with the clients ]. Our relationships are always in the long term. Our culture enables it and makes it more -- makes it stronger actually. And we can develop a [ pro ] portfolio together. We truly believe in this. We have been training people who do not have an experience with [ banking. And ] we are developing a team that is not from the financial market but will learn from us and will learn from these cultural immersions so that we can better serve our clients. So these are the 4 main leverages which will allow us to improve our presence in Brazil, our market share; and will enable us to take our business model to our clients. I see different trends. As I mentioned a while ago, clients are still [ poorly ] served in Brazil. The relationship with the traditional banks is very [ poor ]. The profession of adviser will evolve a lot. We have a lot of opportunities to provide better services, and there will be a lot of opportunities [indiscernible]. The home office model that we've been testing, [ plus ] a direct channel and our channel with partnerships everywhere in Brazil without having physical structure and office, this model has proven to be very successful. For example, we've started the XP [ linear ] process, which is our channel scattered throughout Brazil. That was some 15 months ago. And the first practices and the first advisers who have joined us have improved their productivity even though the market has been [ oscillating ], which only proves that this model is inserted in our culture and [ nothing could ] [indiscernible]. Regarding regulatory issues, we have changes that have come for the better, [ bringing in ] innovation, more entrepreneurship. And the capital that comes in from this market will further encourage our position, and our services will end up improving for our end customers. This is what I have to say about advisory. I'm now going to talk about the digital world, which has grown continuously. The proportion of clients with a self-help profile has increased. We have anticipated this movement when we created our brand portfolio XP Investments -- service 2 different types of clients, those with advisory and those without advisory. We've been investing in this for a while now. Our experience [ is fluid ]. We give an option to the client who does not want to -- having advisory and the client wants to do it on their own. So we have more information about the clients, about their consumption behavior, [ contacts ], navigation in our apps. And then we can offer customized solutions [indiscernible] and desires. We are engaging people who use the recommendations we make [ with a ] higher NPS, sometimes also with a better portfolio in terms of suitability and objectives, with increasing investment in this more fluid experience for the client which likes to do things alone or based on self-help. Today, we have improved our level of data intelligence. We have envisioned that we'll reach the client. The end client will evolve a lot, but we have different indicators that have shown very good results for this profile of client. And then talking a little bit about trends and how our business is going to evolve and our contact with these clients is going to evolve, we have a digital purchase model. We are diversifying, using new platforms. We are also teaching our partners to invest in digital models. Partners who represent us, at the end, are also purchasing the digital model, but they also have an offline model [ in ] how the digital leads into the offline and how clients who were happy with us will recommend us. More and more, we will diversify our channels, our purchase channels, so that we can expose our brand to your experience so that it becomes more organic, thus reinforcing the message and power of our brand. This summarize this, the digital model. We will have an opportunity to work with it in the near future.

[Interpreted] Yes. I'm sure that people will want to talk to you. Guilherme, I want to ask you something. We know that your history blends in with XP's history; and this activity, this profession which started in early 2000. Do you expect to have such an impact with your profession? And when did you tell yourself, hey, this works; and it will be a trend in the future and what we see now is a consequence of that?

[Interpreted] Well, I felt that things started working out as I started working out as -- an autonomous agent here in Brazil. We have over 100,000 bank managers in the country. So when we -- you decide to invest in this activity and decide to become an investment adviser, it's like what happens with a doctor. The investment adviser help -- wants to help with your financial life. And of course, you cannot compare a bank manager who works from 9 to 5 with so many restrictions and compared to an entrepreneur who has decided to invest -- who support clients with your long-term investment. These people work from Monday to Monday, and that becomes their own lives. So one has a job. The other one fulfills his or her path. And since I was successful with that, why shouldn't I help other people to do the same? I'm totally convinced that this industry will grow a lot in the upcoming years, not only with independent advisory, because there are many people who want to become our employees. They want to move on with their career but in a different way. We have the autonomous agent who is an independent entrepreneur, and we have the entrepreneur who want to have a job and grow with the company. They want to be our partner. These 2 models are very harmonious, and this is a trend. There is no doubt about that.

[Interpreted] Excellent. These are wonderful stories. Okay, now changing topics, I wanted to make a comment. When we connect our main leaders with investors, meetings usually take 1 hour, 1 hour and 50 minutes. And you try to address everything. Today, we have in 3-hour event and we are discussing the main aspects because we must be dynamic...

[Interpreted] But I wanted to say that this is [indiscernible] well. And I am really impressed about how we are following our script. We are very disciplined, and this is not the usual thing.

[Interpreted] Well, don't say it and we will start it.

[Interpreted] Well, there are no barriers.

[Interpreted] I'm now going to turn over to José Berenguer, [ called José by many ]. He is going to talk about the XP bank, an emerging bank within the [ XP structure ]. I know that this is a challenging mission, to do it [ in a few minutes ], but could you talk about the main challenges, Berenguer? What are your challenges? And what have you spent most time with?

[Interpreted] Well, good morning, everyone. I would like to thank André and my partners. It's an honor to be here with you today. I'm going to talk about 3 different areas. 2 of them are growing exponentially, as Maffra mentioned in his presentation. And there is another area which is more established. I would like to make 2 comments; number one, regarding the environment of the Brazilian financial system and what's taking place in terms of the regulators' agenda, not only in Brazil but worldwide, with the use of technology and regulators [ leading ] to more competition, prices under pressure and the advantages for the society and the clients. And that has to do with our mission, which is to improve people's lives. With this agenda and using a lot of technology [ that have been ] mentioned, open bank, [indiscernible] -- open bank is going into its fourth stage. There is a series of things that have been created that [indiscernible] less complex, easier and more competitive, leading to better services to the end consumer. The second remark is that we have not abandoned our core. We are an investment platform. We want to become a financial services platform. And banking is just part of this offer, just as insurance and pensions. We're going to have better services that -- our mission is to have a full financial service platform. Starting with investments, as Maffra mentioned. And perhaps this is the best expression of trust from an individual regarding a financial institution.

[Interpreted] The first thing, let's talk about banking as the -- as we call it, the retail bank. We have been working on some pillars, very clear pillars. First, moderate risk, collateral. Credit is a complex thing. Again, with the new [ 2 ] positives, registry, receivables [ talents ], et cetera, it should be more effective, but we're going slowly, going down the pyramid bit by bit. Our base of clients is very strong. These are [ savers ] clients. And we're building our portfolio very carefully, working with collateralized credit cards, et cetera.

[Interpreted] 70% of the resources that we made available to the clients are being reapplied in financial products that is in our own ecosystem. Our credit card has a very important characteristic. It doesn't have any type of fees. We have [ CPD ] levels that are very interesting given our base, the quality of our client base. And now we're also going into the daily services, transfers, et cetera, wire transfers, et cetera, in the sense of creating a complete financial services platform...

[Interpreted] [ It's that ] somebody said that we could -- [ it's because ] we want it. So I just want to complement that: When we think about banking. We've always had a theory which is the following: The share of wallet that we currently have of investment from our client is around 50%. That is -- that means that half the money of the clients that invest with us is still out of XP. If we could twofold the company and we were able to bring 100% of share of wallet of the clients -- of course, this is a very difficult mission, to bring 100%, but we believe we can increase. And when we talk to our clients, the most important thing of why the money is not yet fully with us is because they need services that are in the bank. Or they leave the money there to avoid some kind of [ sneeze ] or [indiscernible]. For those who don't know how Brazil works: In Brazil, if you have a checking account, if you have -- where you receive your salary in a bank, you usually pay a monthly fee. And this monthly fee, it can be somewhere between BRL 15, which is like $10. A card can be like BRL 1,500 a year, which is around $300 a year, so the rate [ is uber ] very high. So the bank says, "Leave 100,000, 150,000 investment. Then I will give you an exemption of these fees." So what is our theory with our [ transactional ]? If we cut a link -- in other words, if we offer the services to clients with adequate fees and products, we cut this link to the bigger banks and we're able to then bring this share of wallet into XP. When we start analyzing the cohorts that we have had since the beginning of the year, you see this [ essential ] increase in share of wallet happening. Well, the theory is really concretizing itself. I'm sorry to interrupt you.

[Interpreted] No, no, no. That was a perfect comment. We understand that the banking products are a way for us to make our clients even more loyal with our ecosystem. And that has been done and proven in the last couple of months. Going to the second pillar, which is the part of companies. This is a segment, as mentioned before, that was not as affected by the technology platform. Individuals, there was a very important movement with big players establishing when it comes to legal entities; in other word, companies, especially smaller companies. There is still a lot to be done. We already have in our ecosystem around BRL 60 billion of assets under management, more than 40,000 clients. 20% of our portfolio comes from that base. We -- with the relationship with these clients, we are able to leverage our ecosystem and a lot of cross-sell. [ We'll do ] investments operations. We end up doing private banking of the shareholders, generating assets for our investment bank. And therefore, we're able to integrate that in our ecosystem and make this base profitable. So what are we looking for? We are looking for impeccable services, adequate [ piece ], technology, simple agreements, simple recipe for the space and also for individuals. And that is what we have been building for this base which is already in house, as Maffra said, with the sense of capturing or bringing more business from new clients. That's what we have been doing. We understand that there is an opportunity to improve the quality of the services that are offered for this space, and so that is what we're pursuing through bringing to market new products. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Interpreted] Now let's go to the Q&A. We're going to have time for some questions before the break. This question is going to be for Guilherme, considering he's been in the company -- well, he founded the company. And it's never been easy in Brazil, right? Interests are high or low. Crises are in. And now we've received a lot of questions that are very legit. Market is always looking forward, and they always think that it's going to be different this time. So Guilherme, once again we have some uncertainties and then the macro scenario of interests going up. And the financial impacts, we're going to talk about them, [ VRE ], et cetera, in the afternoon, but regarding the growth of the company in flows and advisers, what do you see of opportunities in these moments of crisis?

[Interpreted] What I'd like to say is that we don't create the market. We transform the market. So 50 million Brazilians who have some kind of investments in banks, that is the -- our initial low-hanging fruit. Of course, from these 50 million, 15 million are stage 0, people who have the most among the 50 million. We just have to convince them that we can offer a better experience, that we have more competitive prices. And with that, we are able to more and more transform the market. We don't see scarcity, the abundance regardless of the scenario with low interest rates. People are going to keep on investing, consuming credit cards, investments and other things, so we just have to be competent really in showing that we are serious. We have credibility for people to trust us. On the standpoint of having our growth affected, we must remember that Brazil is a conservative country. People invest a lot more [indiscernible] income than risk assets. Let's say that higher interests make our business even more attractive and even more profitable, although we want the country to have low interest rates and controlled inflation because that makes Brazil grow more. Capital market grows as well, but our mix of products makes the company anti fragile and with -- then therefore, [ we'll be growing in the scenario ]. I personally like more challenging markets. When we have a little bit more volatility, what we feel is that, our competitors, the banks, they end up not having a commercial team that is capable of coming to -- close to the clients in the right time as we are able to do. So as I said, we go from money to money. We're close to the client with events and luncheons and dinners, et cetera. That's what the client wants. The client wants to trust the company, wants to be close to the company, wants to be informed in good and bad times. So all the crises that we had -- I don't know if we are in the crisis or not. And we're -- only know it later, but in all crises, we gain market share. And we came even closer to our client [ base, and ] this attribute of trust. And when the more stable moment ends, and it always does, we grow even more intensely. So this crisis -- let's say it's a crisis. It won't be the last, not the first, not the last. We got used to that.

[Interpreted] Excellent. Thank you so much. This one goes to Maffra and maybe Berenguer and about the new verticals. This first question was sent by Tito. He works in Goldman Sachs...

[Interpreted] Just a quick comment, André. A lot of people confuse, a lot of investor confuse our business with like B3, compare us to B3. Since we started -- I started the company in 2001. It was focused on teaching people how to invest in shares. And it was also the financial adviser focus [ on equity ]. And we bought brokerage and we kept focus on equity for a while. Only in 2009 or '10 we started having a complete vision of things. I believe that a lot of people still bring this past with them and think that we have a business that is very much related to variable income. Of course, there's some relation, but it's very low. Currently our business is very much [indiscernible] our focus in investments as a whole and all its derivatives. And that is going to keep on being smaller and smaller throughout time.

[Interpreted] Let me add a concrete and -- info on what you said there, Guilherme. In 2008, 2009, if I'm not mistaken, it's when we achieved #1 as a retail broker in Brazil. And 2008 was a calendar year due to the subprime crisis. At that time, XP was mostly a mono product and mono client. It was retail business...

[Interpreted] Yes. 100% of our revenue came through brokerage and derivatives.

[Interpreted] Exactly. When you look today at equities and [ futures ], obviously there is volatility depending on the mix of products, but it represents less than 25%, 20%, depending on what we have in terms of scenario. That shows [ how the ] company...

[Interpreted] Yes. So the 100% became 25%.

[Interpreted] Yes, [indiscernible] throughout its history. And our variable income market share has been growing. We're in all-time high in assets under custody, 33%. It's more than twofold the second competitor.

[Interpreted] The other thing that I believe that is very much aligned to what you said. During our IPO process -- IPO, when you know the dynamics of IPO: You have 40 minutes to deliver a pitch to explain to an investor that is not familiarized with your business with all your background, so you have to be very sharp and straight to the point on those [ pitches ]. And in that moment in 2009 -- 2019 actually, we explained there's a tailwind, which is the low interest trajectory. XP has done this and that throughout its history. It's very well positioned to be the winner of this tailwind [ and equitization ]. Brazil is very low -- was low penetrated from the individual standpoint, individuals negotiating shares in the stock market. That was very obvious, that it was a booster for XP, and in fact it was. Now this might have generated some kind of confusion for some investors [ that have maintained well ]. So XP is a [ beta story ]. It's an equity piece, [ equitization ]. So the market changes, as it did, interest rates going up. Equities are out of fad. It becomes more challenging. There are more uncertainties. And that then affects XP's business. No, that is going to change the mix of products. That was my speech. There's this -- I have a slide on that...

[Interpreted] You're giving spoilers on the afternoon session. I don't want to stay at this question for too long, but even equities, as Bruno mentioned, that represents something like 20% of our revenue, it is not a direct correlation with market share. Today, we don't charge brokerage in most of the brands and in direct XP world, so to speak, so several of these revenues, even in the variable income world, they are preserved with lower volumes and market share oscillations. I think the answer is XP is not an equity business. We are a lot broader than that, and throughout the years, we are showing that.

[Interpreted] Let me just add one thing, portfolio effect. As these new businesses mature, we start offsetting the volatility that comes from macroeconomic conditions or market -- and we observe that. In wholesale, we are able to observe that, if [ share ] offers are as -- lower than index [indiscernible] gain and traction, merger and acquisition, special operations. So we have this portfolio effect that's more and more present in the company.

[Interpreted] Yes. Let me take your queue to make Guilherme's message very clear in terms of diversification. He mentioned diversification in individual. Here our financial life is concentrated in XP. That is our life project, as Maffra said. Now the company want to diversify. Diversify within the company. That's how we think. And that is what XP has been doing throughout its life. As I said here, in 2008, 2009, it was 100% retail and equities. Now when you look at 2021, several new businesses that we have already [ start comparing ] here. And throughout our future trajectory, this diversification is going to amplify.

[Interpreted] Okay, since it's become a roundtable here, I'm -- I want to make a comment as well. Look at the size of the opportunity in Brazil, [ 120 billion ] in revenue. Our cost matrix is a lot more efficient than the incumbent bank. We have a different culture, and that I would say is our biggest differential, Bruno. Today, we have a way of working that is different. And what we understand that is going to win the game in the long term is precisely that is our way of looking at things and executing our plans. What does the client want? The client wants to have the best experience possible with the best price. If we are able, and we are going to get there, to keep our cost matrix better and better managed and lean and efficient while offering to the client the best experience and competitive prices, obviously we will gain more and more [ space ] and more and more transform this revenue which are still in the Brazilian incumbent banks. So it's not an equity business. Equity is yet another line. Yes, it is important but a lot less important than it was in the past. And it complements our ecosystem.

[Interpreted] We made a huge mess, André. We made a mess in your roundtable.

[Interpreted] No, no. Amazing comments, very pertinent. I'm going to join 2 questions about banks. And we might be able to start with Berenguer, and Maffra can complement. So that -- XP has a banking -- wouldn't it be necessary to advance the noncollateralized spreads [ and ] personal credit? So this is a question about risk, Berenguer, if you want to start by answering. And you mentioned this, Guilherme, at the beginning, but [ if you could, it will be perfect ].

[Interpreted] There are 2 things [indiscernible] 2 ways of answering this question. First, it's worthless for us to go to a business in which you [ break ] the client in 6 months. Today, if we get the price of some of these products, especially the ones called [ clean ], it's almost impossible for clients to use that [ intensely ] to survive for over 6 months. So we understand that these are products that are demanded by the clients. With the new tools created that is receivables, channel, open banking, et cetera, the tendency is that the risk [indiscernible] the risk of the [indiscernible] to decrease. And then we are able to bit by bit go into these business lines. Again, credit hurts. Credit needs [ culture and process ]. We are starting in the low-hanging fruit, collateralized credit. We intend to go very carefully into that and making it viable for the clients and not making the client lose its position as a financial [ dividend ]. The second observation is, if and when we go into that, we're going to be careful, remaining very little [ hit, not crediting up ] credit assets in our balance sheet. We discuss this all the time, right, Maffra? We're always assessing these products. This is asked by our clients, but we want to do this only with quality of an impeccable performance and [ the right prices ].

[Interpreted] I'd just like to piggyback on that and say, when we look at our clients base today, [ André, there are 3,000,300 ] clients. We have a credit [ piece ] that is very good for these clients. These are clients that have investments. They have a financial status that is above the average in Brazil, so we have credit risks which are very good. When we analyze our base, 97% have an expected [ PDD ] below 2%, 97% of our base. So we really have a beautiful blue ocean, yes, [indiscernible] to work with credit products at very low risk. What we don't want to do, which -- what is not in our radar -- [ clean credit ], just to use the example that you shared, is going to be open ocean with a profile of client that is not our profile. Just to have millions and millions of clients here giving credit does not seem to be the low-hanging fruit in the short term. So we're going to advance in the clients that we have in house with very low credit risk. We learned, as I said, that credit, you only learn by creating it, by giving it. So we are learning, evolving and advancing.

[Interpreted] I have a lot of discipline. And we talked about this in the beginning. We like to go after the low-hanging fruit. What does it mean? We follow a clear sequence, one, two, three. Some entrepreneurs go to 50 before they go to step number two. So -- where you have more revenue with less effort and then a little bit less revenue with a bit more effort, this is what we're pursuing, accelerating and start offering credit to the clients [ who are not at our main ]. That means we will be running ahead of our [ gains ]. We want to do a long-term strategy. And so we have [indiscernible] entrepreneur investor [ who would naturally ] generate capital and take higher risks [ later on ]. Going into segments: This is a strong expression, where we will harm the client, charging 300% per year in credit or in [ overgrown ] accounts, so that doesn't make any sense. We must go into segments where we can help them, more or less. We'd better know -- not go into it because it is not really aligned to our culture. There will be phases where we will be able to go into that [ and work corrective manner ] with lower prices.

[Interpreted] Those who are playing right are the ones who go further, anyway, perhaps as opposed to what other people do. And there is no right or wrong. That's what we believe in. We are developing [indiscernible] project, so if it's going to take us 1, 2 or 3 years [ just not ] working with a new business line, this is nothing for us because we are into a long-term project. [ It may need you 13 ] years. So we -- all of the right steps at the pace we'll need to move adequately. And then we harvest our fruit in the right sequence and [indiscernible] number 50. And that's true for every line. We're not going to start accelerating things that do not [ paint as ] profitable or where we know there will be risks of credit or of getting lost on the way, so we're going to move on to [ where it's very, very profitable ] and where we can generate results.

[Interpreted] [ Just on partnerships ]. Sometimes, we talk to investors, and they say, "[ Why don't we partner ]?" And we'll say, well, because we want to be -- we want to have things well done. We want things impeccable. We want to give our clients [ first-line privilege ]. And this is how we view everything here.

[Interpreted] Yes. And what does it mean, going faster with credit cards? We will be included in the top 10 players [ in here ], but we're not going slow. We're going fast [indiscernible] we have profitable businesses. We're growing. We will continue growing fast but in a sustainable manner where we can have returns.

[Interpreted] And today, we have [ 200,000 ] active cards. It only shows the beauty of having the right clients, the right clients in the sense that the service you're adding to that [ once with the ] client will generate [ revenue ].

[Interpreted] Yes. We'll have one or another player that will have them [ at same volumes that to you ] have in Brazil. And that's...

[Interpreted] There's no such clients. We cannot say we're going slow. Going back to the previous topic: How can we have clients trust us their third most important thing in their lives? And then when you decide to invest, you are not buying something [indiscernible]. Will you trust the company and you trust the advisers? For the long term, so we can offer other services. And is -- the company [ is in transition ]. And this is what we're going to do in the upcoming years, so we're not going to start [ wrong just ] because a new company has done [indiscernible]. We're not going to change our strategy. We want to be efficient and generate returns to shareholders and optimize each one of the steps of this journey.

[Interpreted] Well, we have another question. Cunha or Leal, because you're not here, it's more difficult for you to participate, but I'd like to know if you want to add anything to this discussion.

[Interpreted] No. I think that you have [ commented everything ], but there is one thing I wanted to add about going against the wind [ or so in the ] business areas regardless of the scenario, clients [ wanting best ] regardless of the scenario being more or less favorable or the interest rates being higher or lower. The client has an asset. The client has to invest [indiscernible]. The most challenging scenario is when you may see the difference in services when you have a very turbulent scenario. Because when everything is going well, everything goes well. The adviser is good, but when you have large banks trying to play [indiscernible] -- but when the scenario is more challenging, then you see how important it is to have an adviser. This is my contribution to the previously made comments.

[Interpreted] Well, I'm now going to turn over to Sant'Anna, but you can add your comments. You've been involved with the advisory channel. And in the past, we've -- already receive it, and we will continue doing so. There is competition. We [ turn it ] naturally. We invest. We found ways to establish partnerships. And we have received 3 or 4 questions about how we see the evolution. And what are the perspectives, more specifically regarding competition in the [ high ] segment?

[Interpreted] Well, once again, our main competition is still with banks. What we see in terms of autonomous individuals is just a minor share when we think of all of the opportunities. Guilherme talked about the number of people who service clients in Brazil today. We still have a lot of opportunities to grow. 90% of the investment is here; and that's not to mention other products, other products that we're going to compete for. It is only natural that, over time, we have competition. We've seen it happen between brokers. We've seen banks adapting, creating other networks so that they compete with us. Once again, we truly believe in the power of our culture and the power of the way we service our clients in the long run. We are very familiar with our whole network. And then over time, we know their performance, their models, their portfolio allocation strategies, so we want to be closer [ to these and for -- those who are ] aligned with us and that we know well. We will more and more support this type of relationship. At the same time -- and you talked about [ parts ]. And we have invested a lot in gain of productivities and efficiencies. Partners or this [ new ] employee who decides to work with us choose us not only because we have an X, Y or a Z product but because we have platforms and tools that will support them so that they can be more protective, having higher scale, and meet the needs of their clients using their own ways. It's important to define that. We want to be the preferred choice of advisers so that they can have a long-term relationship with their own clients. This is very powerful. And once you develop a trust-based relationship with your clients and the advisers, changing platforms is very difficult. They have to learn how to use different tools. They will say, "Okay, this broker is no good. You have to use that other one," so it's very important for us to engage our advisers or clients, align them with our culture. I think that our network will be able to grow sustainably and align to our values and our culture. Competition will always be there, but we do believe in our model. It will continue growing. There is a lot of market, and those who are aligned share it with us and will continue growing with us.

[Interpreted] Well, I have a comment, Sant'Anna. [indiscernible] autonomous agent who is committed for the long term does not want to change brokers because they don't want to disturb their clients. Okay, so how [ did you say that this ] was best company in the world [ and ask how you're ] changing? Bank managers are the ones who go from one place to the other all the time. A bank manager will change places every 2 years. Clients do not want that. They want reliability and they want [ things in the ] long term, but we know that there are competitors that end up on [ reaching their ] offices. And we are in a very good position to evaluate what [ offer is very easy ], competent or not. We are familiar with the client. We are familiar with [ our peers. We are like protected they are ] part of our network and know that we can identify -- and of course, we can [ get to them as comfort ] possible because we know them better than anybody else. So more and more, what we had in the past will be less relevant, but it's possible that some things will still happen.

[Interpreted] Perfect. Thank you, Guilherme. We are going to the one before last and then we have the financial session. Maffra, I will start with you. We're talking about connecting the dots, not publish short term, but we will evaluate everything with an open mind. We've already received some questions and as usual about the market infrastructure, competition [ in ] shares and international expansion. I wanted you to connect those dots as the question before last in our Q&A.

[Interpreted] Well, I will start with the first part of the question because it has to do with competition with the stock market. We do not have [ such a ] project. We believe in a partnership with B3. We have an excellent relationship with them. We have excellent services and are provided by them, but of course, it is a client-provider relationship and we do have our negotiations. We talk a lot. We believe this is the way to go. We do not plan to start competing with the stock market. This is not where we're headed to. What was the second part of the question? Or...

[Interpreted] Well, the more traditional areas [ in Lat Am ].

[Interpreted] Well, we always discuss this internally. We anticipate some expansion, some international expansion. We have moved in that direction and we have simple things. When you look at the size today of our international [ fund ], we went from 30 million in 1 year, and we will probably reach 50 million next year in our international platform. There are simpler ways of expanding, but we have [ in fact some forms ] of expansions with our office in Miami, something in Latin America, but this is not 100% clear yet. We're beginning, in fact, to do not want to go to country number one, two or three. We want to find ways to become a hub for Latin America [ where ] people will support us, and we will be connected to [indiscernible] U.S. And we'll see clients in Latin America as a hub. So this is part of the logic. We are still organizing our strategy to do this, but it is a desire. Bruno talked about diversification. We want to diversify more and more in terms of international revenues, but I don't think that we'll start working with the retail market in the U.S. or we're going to have [ X ] in country number one. [ This is what ] we're going to do next year. We're going to find more organic ways for this expansion.

[Interpreted] Maffra, since you know our company -- and if you think, in the very long term, we're going to become a global company. We need to have a company with a culture and mindset that XP has, but let's look at the logical sequence of things. For you to be successful in doing so, you must have relevant leaders in the company that are [ in effect ] taking this project forward so that things will work. Because whenever you go to an area we're not very familiar, the challenges are graver. You can do this by M&A, but there is a right point in time for you to do that. And then when you look at opportunities in Brazil -- and they're huge despite everything that XP has already done and transformed in the financial market. That is something that demand focus and dedication for us to be able to deliver as close to perfection as possible. And of course, any company considering expansion and growth, which is our edge, there is a logic sequence for things to happen.

[Interpreted] Yes. So we have the [ costs of opportunity ]. We went from BRL 800 billion. We already have a plan to address BRL 500 billion, and that occurs through the international expansion that we see right now. So let's do something, but we're not going to colonize Latin America right now because of the [ costs of opportunity ].

[Interpreted] Yes. It's easy to choose one country and say, okay, we're trying to put our flag in there, but then having results is a totally different thing. That's something feasible in the short term with low-hanging fruit. [ It's the same thing offering Brazilian ] clients who already invest with us in Brazil to allow them to have international offshore products. It is in the order of 3% to 4% nowadays, USD 5 billion or USD 6 billion. Penetration is low. Investors in Brazil are used to [ ways to diversify at no end reserve ]. The culture for Brazilians is a culture of [indiscernible] account who have over BRL 1 trillion invested [ in those ] accounts. So supporting our local clients to understand that money has no power, [ no race ], we have to have a balanced portfolio with low risk. That's lower-hanging fruits. We already have an international operation, and helping our clients to see that is a huge opportunity. And then the consequence is to do this step well. The next step will be natural, which will be find in this country, this region; and keep on moving forward.

[Interpreted] I think that what Maffra [indiscernible] and Bruno said is that we're going to meet the demands of our clients. Our clients want to be [ growing ] international. We have [indiscernible] bank being opened in the first quarter of 2022 so that they can help us be more effective in this offer [indiscernible].

[Interpreted] Excellent. Okay, I want to [ partly ] comment this ecosystem. We have questions coming from potential clients. We will not have enough time to talk about this more precisely about seeing the channels [ or ] the different companies [ and our ] IP, so it's possible to [indiscernible], but we have a lot of interesting [ posts ] here. Bruno, you as CFO, you take care of the cash of the company. So we always have questions about our M&A strategies. We have worked to protect [indiscernible]. Will that change? What is your vision for the next few years?

[Interpreted] The M&A strategy is [ linear ] in the world of assets with minority participations. And [indiscernible] is to develop this ecosystem because we have better liquidity, bringing in new projects, [ building new ] projects for physical persons to invest. The capital market, it is developed. This is a more efficient way of disruptor in terms of the bank, especially in the world of credit. When you look at the [ 800 or BRL 800 billion, our revenue is ] -- the vast majority is [ then in the world of ] credit in its different segments. In analogy, the U.S. market, which is of course more developed, when the [ advanced ] industry started growing [ their ] banking system -- and the way the financial system works in the U.S. was one -- and ended up being totally different from what it was because a part of the burden for businesses to grow and develop came exactly from the market capital. In my humble opinion, that is a more efficient way to allocate capital and ends up being beneficial for the country in terms of its development. This is a clear M&A strategy that we have. [indiscernible] M&A. Because we are on [ the system of ] entrepreneurship, XP attracts a lot of entrepreneurs who want to have some type of partnership using [ our potential ]. You always say that at XP, whenever we receive a follow-up project [indiscernible] positive. And with [indiscernible], for example, a [indiscernible] will be positive, so let's go into e-commerce and do this. And of course, it can't be that way because we must establish priorities. What will lead to better returns? And what is part of our strategy? We will continue establishing partnerships. Some of them may turn into M&As. And we're always on the watch for opportunities, but they must be related to our strategy.

[Interpreted] André, when we look at it, we can see new verticals being developed, credit, banking, companies, securities. And it takes time. It demands investments and effort. And we always analyze the buyer [indiscernible] buying as a purchase. You can hire service and establish a partnership or [ events to be purchased ]. We're always open, trying to find and define how we can excel [ going into these fronts ], how we can accelerate the creation of these services. And then some M&As and partnerships come into play but in a more organic way, instead of buying something huge. Because of all of the challenges involved.

[Interpreted] M&A must be related to the strategy of the company. It must include a cultural fit. That's very important. M&A in paper with a good narrative looks wonderful, but then when you integrate and execute, you're talking about a business which is run by people, so you have to align that all to the cultural fit, to purpose. And in financial terms [ happening ], it must pay off. So if you have any cultural fit and if the [ finance area ] approves it, we're always willing to analyze any opportunity.

[Interpreted] Perfect. This is the last one. I promise. And then I will ask Fernando (sic) [ Fernandes ] and Maffra to share a message, an "end of the year" message, but Maffra: crypto. This is a topic we understand a lot about. We have clients and investors, so what are the next steps and the timing? What can you talk about that? And then let's wrap up and move on to the next session.

[Interpreted] Well, I'm enthusiastic about crypto coin. I understand a lot about the technology and the purpose. And behind cryptos, there is always a project. And you must be able to differentiate what is a serious project from something which is empty inside. Whenever we talk about crypto -- we had an exchange. We called it [indiscernible]. It was founded in 2017, if I'm not mistaken, 2017, 2018. And then last year, we decided to close it not because we do not believe in it but because in 2017, 2018 we had a different regulatory environment in Brazil. And that was not part of the group's aspirations. [ And we have enough synergism ], so at the time, we did not see a lot of opportunities. It must be integrated and available for our clients. And that's why we gave up on it, but we have carefully looked at this market. We have gone from [ product ] developments such as [indiscernible] [ and funds control ]. And it's -- of course, [indiscernible] is for us to keep on moving on so that we can impact [indiscernible] products available to our clients. So we can expect some new things from next year. In terms of products, our clients should have this as a different class of assets. It's more volatile. And it has less representation in our client's portfolio, but investments in active cryptos should have lower representation. It's a technology that we have to be closer. I do believe that the financial market in 5 or 10 years will be totally different. And we are not sure how different it is going to be, but it has to be -- with that urbanization, [indiscernible] asset have to be part of this market. And we've always been innovating, and so we want to work with them. We are looking at them closely and will definitely have some new things in the future.

[Interpreted] Guilherme, would you like to share a message?

[Interpreted] Well, the message I wanted to share for our wrap-up. Well, we talked about the type of entrepreneurs we are. We want to give returns for shareholders. [ We've run well for ] with revenue, manage investments [indiscernible]...

[Interpreted] What about clients?

[Interpreted] Well, in 2014, 7 years ago, it was the year with about 45 million of net profit. 7 years later -- and we will perhaps go above this 100x, right?

[Interpreted] Yes.

[Interpreted] And if we consider the next 3 quarters, it will be 100x higher, so within 7 years, we have multiplied our results into 100x. I started the company from scratch way back then. We had to learn how to provide results. I always say that it's easy to do things well. The difficult thing is to do this by making money, so if you [ give me an infinite bag ], we will do something wonderful for you, but that will not work over time because revenues and expenses will not be balanced. I don't think that way. We like to do things well. The thing must be healthy over time, so what you've seen here -- well, you've seen in the past years is what you will see in the upcoming years. We manage expenses very well. And we [ enchant ] our investors more and more. And perhaps Brazil is the country with the most opportunities in the world, especially in the finance sector, where the income with banks are still focused on the product, not on the client with expensive fees, services that are not appropriate. And our mission is to keep on transforming that in the next years. I am sure that we will do it and we will do it fast. Thank you once again.

[Interpreted] Thank you, Guilherme. I'd just like to thank Guilherme, Maffra, Berenguer, Sant'Anna, Bruno; Leal and Cunha, who are here online with us on the screen and far, however, close to us. We're going to have our second session in English in 5 or 10 minutes from now. Thank you so much for the participation. We now have a individual -- a base of clients that are also participating in the event. I hope you're enjoying it. We will be back with the financial session in 5 or 10 minutes from now. Again thank you. [Break]

Hi. We're back with XP's Investor Day 2021. We will conduct this session in English. So if you are watching the session in Portuguese, you will see the slide in Portuguese and the other way around. So we should be fine. We wanted to do a very democratic event. So we are switching languages here to talk about financial highlights of the company, some of the main questions that we get from investor on a daily basis. So we hope you find this productive and insightful. And again, we will be available for Q&A at the end of this section. So moving to our first section on the financial highlights. Again, we talked about that on the first -- on the business section about the effects of volatility, changing macroeconomic variables on our business. So Bruno, if you could reinforce those effects and now talking specifically about our P&L, that would be great.

Okay. Thank you, André. And I'm going to be quick in this session. We're going to go through those 3 topics: the macro impact, we have already talked in our early session; the financial revenue; and then the new verticals that we're going to share some power metrics and more data with all the investors. So looking at the macro impact, what this slide shows in terms of number is exactly what we described earlier, the portfolio effect. Basically, what you have, at least for me in the green line, is the component of our revenue of fixed income plus floating divided by the equities in the future. And as you can see, it goes in the same way as of the SELIC rate. So at the end of the day, if you look at this ratio, it's a ratio that when SELIC rate is going up, it benefits fixed income plus floating compared to equities in future. When you have interest rates going down, it's the opposite way around with a short lagging time. And on the back of the slide, you have the shadow area, which is our revenue growth. And at the end of the day, the revenue keeps growing. What changed, as we said, is the portfolio, the mix of the revenue stream. Now moving to the next slide. Here, the financial components, that's another question that we get a lot from investors is about the net income from financial instruments. By the way, I checked the other day at Bloomberg, and when they look at the revenue of XP, they only get the services rendered as revenue, they do not get this part, which is wrong because that's a very important component of our total gross revenue. We are in the financial industry. We work with financial instruments, and we do make a very recurrent revenue with net income from financial instruments. We divide this part of our revenue, the flow business in 4 big blocks. So number one, we have the activity -- market making -- what we call market-making activity is basically to enhance the experience of our clients and bring liquidity to the secondary market, as we described earlier. And it benefits the development of the Brazilian capital market itself. And among the market-making activity, we have fixed income, all the financial products, structured notes and other usage of derivatives to hedge your equity portfolio and things like that and also the retail liquidity provider. Then we have a second block about credit, products credit related. The third block about the floating and the remuneration over our adjusted gross cash. And the last one, the liability management that goes into net income from financial instruments. Moving to the next one. And here, we see the -- you have on the bar chart, the number of millions of this revenue altogether, net income from financial instrument. As you can see, it keeps growing in a very steady pace, and you have the component of retail in that revenue because in that revenue, you also have institutional clients together there, but retail represents like more than 80% of that revenue. And you can see how recurring is and grows with the growth of the platform in XP, as we have said, in several earnings calls that we have had with investors. And we put together in this slide, the VaR, our risk metric because, for sure, when you are buying and selling financial instruments in the secondary market, you are taking some kind of risk there. And we do that only to provide the flow. And because of the ecosystem XP has built through its lifetime, the flow that we have, it's huge, and it allow us to hedge the positions, including not only retail clients, but also institutional clients altogether and corporate clients and take a very low risk to generate and improve the secondary trading of all those different markets that we are participating in. So as you can see, the VaR of 1 day with 95% of confidence has been pretty much stable. It's like 25% of the limit that we have established in our treasury committee, which, by the way, is a very strict limit. It's only 50 basis points of our net worth, and we use a lot less than that. So basically, the message here is, we do use capital, our own capital for that business, but it works much more like a warehouse where we are developing the Brazilian capital markets, enhancing the liquidity in the secondary trading, then taking a directional risk in whatever direction that is. We are not allowed to do that. We only take some risks because of a client demanded a position from our treasury and then we go and hedge that in the market. And of course, some of the transactions, they are not perfectly hedged, and then we have to take some risks, and we do that respecting that risk policy that, as I said, is very strict.

Just to reinforce here, the message that Bruno just said, we are -- here is not a business about our traders taking bets, but it's a business related to our clients, okay? So it's a much recurring business than directional or big bets on interest rates, FX or whatever. So it's a client-business driven. That's the key message here.

The third quarter of this year, the last public, net income from financial instrument represented like BRL 1.6 billion of total revenue and the VaR BRL 14 million on average each day of the third quarter this year. So I think that's -- those are the numbers, and it shows it's a client business returned, and we'll keep growing as our platform keeps growing as well.

And just 1 comment. So we did this whole explanation because we received a lot of questions, why the financial revenues have been outgrowing the services revenues, right? At the end of the day, it's an output of the mix, right? So for example, until August 2019, the IOP didn't even exist, right? So we make money with futures with brokerage. So that was recognized elsewhere in the income statement. So starting August 2019, those revenues were recognized on financial revenue. So fixed income is also there, which is more important right now with higher interest rates. So it's an output of the mix, right? It's not a given trend. It's something that -- I mean, to our previous discussion here about [Audio Gap]

[Audio Gap] to think about this point, in my view, is 3 factors. You have the growth of clients in our platform, so that's number one. Number two, you have the cross-sell, the penetration effect because Brazil is underpenetrated when we think about capital markets, when we think about products being traded in the secondary market. A couple more of slides. We know -- let me just give a little bit of context here. When we did our IPO, we simplified somehow what is a very complex business. Investments is complex by nature. It's a dense topic. You have many, many products. People usually don't understand about it. So we decided to simplify and we have retail, which is 3/4 of our total revenue. And the way we get to the retail revenue is by ecosystem, multiplied by a take rate, and then you get to the retail revenue. And then we...

Bruno, excuse me, sorry, we're having some technical problems. We will be back in a couple of minutes. Thank you. Hey, we're back online here with XP's Investor Day. So Bruno was just about to discuss our new verticals power metrics. Bruno?

Yes. Sorry about that. So going back, I don't know how much you heard, but just to finalize the previous slide, the key message there is net income from financial instruments, something that we'll keep growing in our view, 3 components: client growth, higher penetration and development of new products in the secondary market. And we use capital in that business, taking a very low risk. We do not take directional position, all the positions we take is driven by 1 client needs, either an institutional client or a retail client, and we hedge. But as there is no perfect hedge for some of the positions, we end up taking some risks, but with a very low VaR, which in the third quarter, it was like BRL 14 million to deliver a revenue of BRL 1.5 billion, BRL 1.6 billion. Now moving to the power metrics and new businesses. I was talking about the IPO time. So at the IPO time, when we think about investments, it's a very complex topic, right? We try to simplify. And we end up with retail revenue and what drives retail revenue in the investment business is AUC. That's the main KPI because you make money with money and you need the custody in your platform to make money out of it. And then you have a take rate multiplied by the average AUC, you reach the retail gross revenue, which, by the way, has been around 75% of our total revenue. No, no, move 1 slide back, please. Now then after the IPO, we entered in new businesses in new verticals. And we heard the pushbacks from investors and analysts because they were modeling XP based on the AUC, the main KPI for investments and then somehow the AUC went down because of market conditions, then went up, and that was correlated with the retail revenue. And the AUC went down, revenue went up and then some investors and analysts who are questioning how come, what's going on. And there are some part of the retail revenue that is not AUC driven. And also, we have those new businesses that are small nowadays, but they are growing really fast. Our intent here in this Investor Day is to show you more data that from now on, we are going to share with the market. We understand that it's important for you to model those new businesses not from the investment business itself. And we are going to share 4 different verticals here. Patient funds, which is an extension of investment at the end of the day because we are talking about investments with a tax benefit and a retirement plan for the individuals. Then cards, which there is no AUC related to it. Credit is the third one, a new business, the business that has the highest part of the addressable market in the financial industry. And lastly, insurance. So those 4 businesses, you're going to see KPIs each quarter, each year, so you can follow up the development of those businesses in XP. Now we can move to the pension example, please. Thank you. So here, we brought the pension fund case. And why is that? Because that's the one that is the oldest one, 3 years, less than 3 years, right? We -- as Maffra said earlier, we started our pension fund through our own insurance company back in 2019. We have been distributing in our platform pension fund from third-party insurance companies for a longer time. But in 2019, we decided to do it through our own insurance company. So basically, 2 years, this is a business that has an addressable market in terms of AUC north BRL 1 trillion. We were at the end of 2019, #10 with our own insurance, having only 0.4% of the total addressable market in terms of custody. Then you fast forward to the third quarter, this year, this 0.4% of market share of the custody has increased to 2.7%. And we went up in the ranking from 10 to 7. Now if you look on the right, the other part of the bar graph, you can see that in terms of the flow, we have been getting much more than our market share in terms of the custody. Year-to-date until September, we have been getting more than 50%, 55% of the flow going from #5 in terms of the flow in 2019 to #1. What does it tell us that this business is a very profitable business. It has a huge growth potential that we already are getting much of the flow part of these businesses. So we have a lot to grow in the following years. And this example is what we believe we are going to be able to achieve in the other verticals as well. So let's see the power metrics that we are going to share with you. One, and I believe the main power metric, is going to be revenues for all those segments. So we are going to split the revenue. And those revenues, they are inside retail revenue, okay? And then you're going to be able to look at, okay, how much of patient fund is part of that, how much of cards, how much of credit and how much of insurance. And here, we have the last 12 months revenues on each of them. The largest one is pension fund, the oldest one that we started earlier, BRL 172 million of last 12-month revenue in the third quarter. Then you have the cards, BRL 94 million, that's -- it's the last 12 months. But basically, we are talking about 6 months, right, because remember that we officially launched our credit card in March this year, and these numbers are from September. Then we have the credit with BRL 81 million. And finally, insurance, BRL 57 million. And in insurance in that number, BRL 57 million, we are talking about the marketplace, not our own insurance company's written policies for life insurance, okay? Something that we've just started to do and in 2022 is going to be different. So the revenue component, the total approximately BRL 400 million in the third quarter, last 12 months, it's something that when we release our fourth quarter this year, we are going to share with all of you. And then, for each of that business, you have a KPI. In the patient fund, as I said, it's pretty much similar to investments. So AUC is the main KPI that we had more than BRL 40 billion in September. And in that number, we have our AUC from our insurance company and also the third party that we distribute through our platform. But our insurance companies is the majority of that, it's around BRL 27 billion out of the BRL 43 billion. And in the patient fund business, just to give a view of the market share that we have when we think about revenue pool, it's BRL 8.5 billion revenue pool, so approximately 2% of market share. Huge growth in that business is standing alone. And one more comment about this business is really good for the investments because we already have data that clients that we cross-sell and have their pension funds in our ecosystem. The churn is much lower and the cross-sell of other products is like almost 4x than the clients that do not have. So we see a great potential about cross-selling in our ecosystem. Cards, the main KPI, TPV. You already have that KPI. So basically, the third quarter KPI, BRL 3.3 billion. And when we look at the revenue pool for cards, we are talking about more than BRL 20 billion. We have like 0.4%. It's nothing, and we see a huge growth potential there as well. Then credit. Credit, the main KPI, we also already disclosed that. It's the loan book that we have as of third quarter this year, BRL 8.6 billion. And the revenue pool here, we did not bring because the revenue that you see in the credit is collateralized revenue, basically. And that's a market that the revenue pool, it's almost nonexistent, right, because we are creating a market. It's going to be the same thing with margin loan. As we enter in new credit businesses going forward, then, of course, we would have a revenue pool. But it didn't make sense in our view to put like a market share because we would have a very high market share of a market that is almost nonexisting. We are creating this market. And finally, insurance. As I said, 2 main KPIs to follow. The market share of our marketplace of insurance, where we are going to sell, we have already started selling, for example, health insurance through our marketplace. We already sell third-party life insurance through our marketplace, and we will continue to sell. And we also have -- it's a different market, the life premium market because we are going to issue life insurance policy, and then it's another type of market share. Those 2 markets, the marketplace, the brokerage business, plus the life insurance business, when you add together, we are talking about almost BRL 115 billion of revenue pool. And when you look at the market share that we have, nothing because we are just starting there. So basically, the message here is, look, all those 4 new businesses that we are in, they have huge potential for growth. We also understand that it's expand the core and expand the core is important because all those businesses together, they will reinforce the core business investments. We want to be the dominant player in the investment business. And we understand that to do that, we need to go to the next phase. We cannot be only in investments as [indiscernible] and Maffra talked about in the earlier session, we need to get completely the link of our existing clients, our investor clients with the banks. And to do that, we need to go into banking. We need to provide more services, more products, so our clients can feel comfortable to concentrate everything through our platform. So those businesses, they are enablers to our core business, which, by the way, despite all the growth that we have had in investments, when we think about only individuals, not considering companies that are also clients of our investment business. Only individuals, it was the BRL 70 billion revenue pool. We believe that we can be dominant there, and our market share can grow like more than 3x only in investments. And those new businesses, they are a very powerful enablers to make that happen. But those new business by itself, standing alone, they also are going to be relevant in our revenue going forward and contribute to the growth and diversification of the business, which is the last slide that we would like to share with you. So when we look at those new verticals, pension, cards, credit, insurance, that represented only 3% approximately of our last 12 months revenue in the third quarter this year, BRL 0.4 billion. And we fast forward to 2025, we believe that those business can represent approximately 25% of our total gross revenue. Multiplying the revenue of those businesses standing alone by 25x, which would get to the BRL 10 billion of revenue. And you're going to be able -- I mean, any investor analysts, of course, can have assumption that you think it's doable. We do believe that's totally doable. But at the end of the day, I think the main message here is you're going to be able to follow up that on each quarter and see how the revenue is growing, if it's growing. It's not, what's going on. And also the other KPIs that will help you to model those new business. With that, I mean, I open for Q&A, as I said, short presentation, let's go directly to the Q&A.

About capital allocation in the sense -- I mean, the stock has been down, right, on 2021. And we have some questions here about a potential buyback opportunity and how do you see that and other capital allocation decisions now and going forward?

Yes. We get that question often from investors. And I totally understand, we take here capital allocation very seriously. We need to be very wise the way we allocate our capital. But the thing is we are a high-growth company. As I showed earlier, the net income from financial instrument despite being a very low-risk business, it requires capital. We are not paying dividends, and we don't see this company paying dividends in the near future. And why is that? Because we have this huge market to address. And that is the focus of this company. So I think that -- and we discussed that internally a lot, considering the growth we have ahead of us, considering the opportunity we have ahead of us, we should take out 100% of our profitability and cash generation and reinvest in our growth. We are in a phase of accelerated disruption in the financial industry in Brazil. And we want to accelerate our pace as well. Maybe if we were in a different stage of the company, we, of course, would be paying dividends and considering buyback in shares. But right now, I think the right thing for the long term of the company to do is to use our capital to reinvest in new verticals and in our core. Those 3 things, protect the core, expand the core and build the future in a very accelerated pace.

Great. A related question. You're talking about investments, what to do with our cash and so forth. We've been hiring a lot of people, right? This was already possible to see throughout 2021. But on SG&A expenses, especially on the third quarter. And I think probably the 3 of you could answer this question in different ways, but let's start with Bruno from a more financial perspective and maybe Maffra and Sant'Anna can add on what is the breakdown, right? What type of people we are awarding the company for what areas? So Bruno, what do you think are -- I mean, the short- and long-term margin expectations for XP as we grow so much and as we get to a sizable company?

I don't like to give guidance for short-term margins or anything like that. I mean we are focused on the long term. We know that the long term is a consequence of multiple short terms. And we focus a lot in execution. But you give a short-term guidance, you get stuck to it and then you need to have flexibility to adapt and do whatever you think is the right thing to do for the long term of this company. But for sure, we are investing a lot. Look, the bank, take the bank as an example. Our digital bank has really started in terms of hiring a lot of people and investing. Maffra can help me out here. But 1 year ago, right?

November 2020.

So November 2020, 1 year ago, we are creating a start-up inside XP. And of course, that's going to make the SG&A to grow at a higher pace than in a different stage. And we are -- are we frozen? Sorry, I see my image frozen. No. Are we good? Okay. Sorry about that because we have heard the TV and -- but anyway, so going back to the startup. We have a start-up inside XP, the bank, the cards, businesses. The insurance business that we are now entering, everything new, of course, demands SG&A people. We are a people business, service business, investment in technology. We talked about that earlier.

We spend in the channels.

Spend in the channels because we have to reach not only the capital, but Brazil is really big. So our SG&A will grow. But we also have more mature business in the investment part and the cross-sell is really powerful. And those business, they expand margin, right? So it's a mix, it's a mix. So far, our expectation is, look, in next year, for example, to talk about short term, André, so I don't hide from your question here. We expect to have a cost burden there in the foundations and everything we are building. We are still going to be profitable for sure. That's -- we talked a lot the way we entrepreneur. But we are going to have probably the peak in terms of hiring people, those new businesses and scaling them. And the revenue comes is lower, right, but it comes. We are already had like BRL 400 million in the last 12 months, and that's going to grow really fast the way you see it. So yes, maybe a good way to see it is, okay, XP is building a lot of different things, it's expanding the core, the addressable market from BRL 70 billion to BRL 120 billion to BRL 500 billion. So it's multiplying by 4x in the next years, and it makes sense a lot to do that.

Yes. And another way to answer the question is when you look at the more mature business, we see gains of scale, okay? So we see gains in margin, this kind of stuff. But as Bruno mentioned, we are investing a lot in new businesses. And basically, we are investing hiring people because we have to build everything from the ground. So this year, we hired, I would say, if I'm not mistaken, like 3,000 people. Next year, we will have new hires again, but in a slower pace, looking at new businesses in a slower pace because when you decide to enter a new vertical or a new market, you have to invest upfront to capture the revenue in a few months. So what I can say is all the businesses that we are entering, they mature really fast when you have a long-term view because most of them in 24 to 36 months, they breakeven, okay? They are profitable. And some faster, some slower, but it's pretty fast. So we have been investing since, I would say, a year ago. We will invest next year again. But we already started to capture some revenue. And that's why Bruno mentioned, we have some gains of scale in more mature business, but we have new business ramping up. So that's the combination of the mix that we see -- why we see the SG&A growing. But I would say that we are on the verge of the peak.

There was a question on the last section about M&As, right? And one thing that we are very confident about is about organic growth, right? Organic growth and all those verticals, it's about people, right? So we think we're getting better through time in terms of hiring the best people, doing M&As of people to start those verticals, and that translates in SG&A. So as Maffra and Bruno said, I think we will have those gains in the very near term, and you'll see that will mature on the margins once we start to disclose all the results.

But that's actually a fascinating way to look at it, right? We analyze M&A sometimes or most of the times, we decided to do it our own way internally. Thank you for all of you.

Just to this point, even when we decide to do internally, it doesn't mean that we are going to build everything internally. We can hire as a service. We can do partnerships. We only build proprietary technology when it's something that's differentiation for XP or it's strategic. Otherwise, if it's a commodity, you just buy. You can buy as a service, you can do partnerships. And so it doesn't mean that we are building everything inside because that's another question that we received, okay. But are you guys building everything from the scratch inside? No. We have a lot of partners for banking, for insurance, for credit cards. We don't do everything inside. It's always -- if it's strategic, we build. If it's not -- it's a commodity, we buy.

And always very conscious of costs, right, as Guilherme and Maffra put it very well on the first section. So next question is a slightly more specific about trading market share for equities. Bruno, that's a fairly -- I mean, we have 5x the size of the next player when we think about what we call BOVESPA, right, the trading of stocks and there is some seasonality over the year. Do you see some trends there, something that you're seeing from the competition or internally that might suggest this going up or down?

Look, André, equity -- retail equity because we talked about the custody equity. It's the first KPI, which we have, if I'm not mistaken, like 33% market share. I think the closest competitor is Itau, if I'm not mistaken, with something -- below 15% market share. So we are more than double than the closest competitor in custody. It wasn't -- I mean, in the past, it was the opposite. I think Itau would have like 25%. We would have like less than 15%. And you fast forward a few quarters and here we are. Then you have the -- that you can see the data in the Bloomberg and other source. The total equity brokerage market share. I do not like to look at the total. We -- of course, we do look at the total as well, but it's tricky because in the total, you have institutional clients. And inside institutional clients, you have those clients that do not really generate revenue. You have the high-frequency traders. You have the passive funds and things like that. So I would be cautious about looking at the total. The way we -- the KPI that we look closely is the retail equity brokerage market share. And there is volatility in that market share, especially if you look on a monthly basis, for sure. If you look on a quarterly basis also, you need to look at a longer term to define any trend. And I looked at yesterday because of the report that [indiscernible] issued. And look, if you get the retail market share of XP, in beginning of this year, January was -- I don't have the data here with me like around 53%, somewhere that, okay? Then we hit like in March, the highest market share this year, something above the 55%. Then in June, we went back below 53%, like 52 and something. Then in September this year, we went back up to 54%. And now November, we just got the number a couple of days ago, I believe it was like a 53.4% something like that. So there is no trend there. There is competition, more competition for sure. That's no question about that. But at the end of the day, the equity market share, it's going to fluctuate, but I don't see a trend there.

Great. Thank you very much. The next one is about the retail liquidity provider, right, the RLP, Maffra and the evolving regulation, right? B3 announced recently that the RLP for equities, which will start with a few names, right, a few stocks, is going to be up and running soon. Do you see that -- of course, it depends on the mix. It depends on turnover and so forth. But did you see -- do you see a major growth of contribution from that business line? What is the outlook in our opinion?

Yes. It was just announced that we are going to have a test for equities in the RLP. But as you mentioned, only with a few names for now, and then they will evaluate again in a few quarters down the road and then they can include more names. Today, there are some revenue, but when you compare to the numbers we have today, it's not as relevant as the current revenue. But there are some important revenues. But with only a few names, it's small, okay? But I believe that in the future with more names, then we have big opportunities to have a good increase in revenue in the RLP.

The good thing about RLP is that the study done in London show that it's really beneficial for the client at the end of the day in terms of liquidity, in terms of price and everything else. And this study, it's -- I studied that it has more data points than the previous one that at the time, B3 and CVM, the regulator in Brazil, used to allow this in a test phase. So I think that's one positive. And the second and final comment about RLP. It's something that you, Maffra tell a lot to investors, I've been together with you. When people also -- I don't think people realize that there is a cap there, right? There is a cap, so 15%. And this cap -- so the market now is going down, the trading volume, the RLP in futures are going to go down. If the revenue of RLP in XP going down as well? Not necessarily because we are already capped at 15%. So our revenue could be higher if we didn't have that cap. So the market can shrink. And we still are going to have 15% of a smaller market if that happens to make our revenue from there and to use the RLP.

Great. Thank you. So we just announced a few minutes ago or show that we expect 25% contribution from new businesses. So people are doing the math the other way around what we expect the existing business to be, which is around BRL 30 billion, according to that calculation. Is this -- and it seems there is a consensus in the market that the take rate drive on the existing business is expected to go down even so gradually. Bruno, are we talking mainly about AUC growth to drive the growth of the existing businesses?

AUC growth to what? Sorry.

To explain, right, the growth that we expect on the core business, right?

But in terms of the new verticals that we are entering in?

No, no, the existing, right? They're doing the question the other way around, right, what we expect for the existing business, right, which is the difference? What is the driver, right?

The question is, that André is, assuming that take rate will go down, how will you grow in other...

Yes, stable down here. Yes.

But I don't believe this is completely true. We have been saying and working with downward take rates for the past years, but it didn't happen. It was our expectation, but it didn't happen because every year, we create new business lines, new products, new revenue streams. And we have been able to keep the take rate for the more mature business. So I -- if you ask me, okay, 10 years down the road, the take rate will go down, okay, probably slightly, but our job here is to keep innovating, finding new products, create new things to keep the take rate at the level we have today. But we work with a downward movement.

But take rate is not a price. It's important for investors to understand that as well. Take rate is a math equation. We have retail revenue. We have an average custody and then you end up with the take rate. This question, and I understand why it comes because that's the main KPI to model 75% of our revenue. And I say, look, flat. I don't know because I really don't know. It can go up. It can go down depending on what happens to the AUC and the product mix, but it's not price. And then you saw those 4 new verticals that we're going to start sharing KPIs, except for [indiscernible] that has an AUC associated to it. Cards, credit and insurance, they don't have it. They don't have it. You can say that, okay, credit, there is a correlation because we are going to model as a percentage of the AUC, considering you're talking about mostly collateralized credit. I got it. Yes. It makes sense. But it's not AUC driven at the end of the day, right? And it's retail revenue. So we have shown in the recent past, the ability to keep growing, grow the AUC and keep the take rate flat in the last 12 months, around 1.3. Our thinking here is how we increase the LTV of our existing clients by adding new products and new service that our clients demand from us that they are consuming in another platform in the bank and how we do it to make them consuming from our platform. That's the game here, and that's why we are developing new businesses.

Great. So the last one is more of a conceptual big picture question. We don't provide guidance for AUC or market share, how big we want to be. This particular investor is saying that he believes XP to have around 5% to 10% of the investable assets in Brazil. And he's asking about like long-term ambition. How far do we think we can go? So it's a pretty broad question, right? We have always said that we have no reasons to believe why we should be lower -- I mean smaller than the big players. But I'll leave that aspiration to you.

Get the market leader now, depending on 1 of the 5 big banks. We want to bid them. That's it. So we are aiming for the first. We always do. We know that it's hard. It takes time to get there. As Maffra said earlier, we are young. We want to be here for the next 20, 30, 40 years, how long we can be here. It's going to be our goal. It's our purpose for life here. So yes, we want to be #1. And we are not #1 now in the investment business when you think about AUC. We are not. We have a greater market share than we had at the IPO time? Yes, for sure. Can we -- I said before, we can multiply by 3x. Yes, for sure, we can our market share. We are a market share case. That's one important statement. As we said before, we are not an equity business. We are in all the business of investments. We are a market share case. And our market share has a lot to grow yet. I'm not saying it's going to be easy. I'm not saying there is no competition. There is a lot of competition, but we do have a strategy. We believe we have a differentiated culture, as we said. We have the XP management system that Gabriel talked about.

Client folks.

Sorry?

Client folks.

Client folks. We have our distribution that Sant’Anna here is leading the effort to make it even bigger and broader in Brazil. We see a lot of opportunities there. We have that unique ecosystem that we keep working to reinforce it. And now we are going to complement that ecosystem with more products that it will establish even longer term and deeper relationship with our clients. And by doing those other businesses, we start to open up new opportunities, how to address different profile of clients. Let me give you 1 example about it. Think about the client that has no investments but has income, good income. We have a lot of people like that in Brazil that they earn a good amount of money through their job, their work, but they spend the whole thing with traveling, school for kids, infrastructure, whatever. So they cannot -- they don't have savings to invest. That client now that we have digital bank, cards, credit, insurance, it's a client that we never in our history focused on because we are only focused on investments, new opportunity.

The thing is if there's 1 client that we're very good at serving is a client that invests, right? The client that has savings. So what Bruno said about reinforcing our core, right, credit pension funds, insurance products. As we start cross-selling, people start trusting us with more share of wallet, right? So approximately, we can double our share only inside our client base, right? So that's the basic potential. We have a lot of optionalities on top of that. And of course, we want to keep growing, but I think that's our main strength in terms of market share.

Yes. We got 1 question actually about that, which was for you to reach the BRL 10 billion forecasted revenues in 2025 for new businesses, do you need to add a lot of clients? And of course, the answer is the mix, right, of both. But to Sant’Anna's point, we have a lot of cross-selling to do inside our home, right?

Totally not a lot of clients. We do have embedded in that assumption, client growth, but it's not a lot of client because the penetration, the cross-sell inside our platform for some of those products, they are almost nonexistent.

And another way to answer this question is, as Bruno mentioned, we are going to focus first on the customer base that we have already inside XP, then we have the clients that have a lot of income, but they don't have savings. And I don't know when and if we will do that, but then you have the clients with low income and this kind of stuff, but it's really far away from our view. We believe that we have to focus on our own customer base and in the near future, focus on people with income -- good income and no investments. So that's the way we see right now. And of course, we will have customer growth in the next years to achieve these numbers.

Yes. connecting the dots, once again, it's really our mindset here for this and other subjects. So we are actually out of time. Again, I would like to thank Bruno, Sant’Anna and Maffra so much as well as the other leaders who are not here anymore. We would like to thank you, either you're the shareholder, employee, no matter who you are actually for your attention and interest on that event. We hope to be in person next year, right?

Yes, we do. I was discussing in the break with André and we're saying, well, we should have the analysts and investors question us themselves. It's much nicer that way. You can question whatever you want to, and we are going to answer with 100% transparent what we can tell you for sure. That's who we are. Unfortunately, we didn't do it that way. But hopefully, next year, we are going to do it in person, and it's going to be even nicer. And also, I hope you like the new power metrics that we are going to share. It's, as I said, a constant pushback that we get from investors. We totally get it. That the more data and information we provide, the best for an investor perspective. But we also need to balance that with competitors because they probably are watching us right now. And it's natural, it's part of the game. But we need to balance that thinking about the long term of this company because that's all we think about. So I hope you enjoyed this increase in our disclosure from now on.

Yes, for sure, we learned a lot. So next time around, we will do things slightly different to improve, right, the event. So you can do your own questions -- ask your own questions live. But yes, we learn as you go, right?

Maffra want to end up.

Yes. Just to finish here, we would like to thank you, everyone, for joining the Investor Day. It was the first one, and for sure, we improve, as Bruno and André mentioned for the next ones. But I hope you all could learn how we think here the way we think the strategy, culture, people and again, for us, XP is a lifestyle. It's something that we really believe it's a purpose for us. And we will be here for the long term. So you guys, we are the -- I would say, the main investors in the company. Our money is here in the company. We really believe in what we are building here. So I'm very happy to have you guys as partners, as investors. So we are just at the beginning. And as you saw, we have a clear road ahead of us of growth, and I'm very excited for the next years. So thank you very much.

Thank you.

Thank you, everyone. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]