Earnings Call Transcript - XP Q1 2021

Andre Martins, Head of Investor Relations

Okay, good afternoon, everyone. We hope all of you and your families are healthy and safe. Welcome to XP Inc.'s Earnings Conference Call for the First Quarter of 2021. I am Andre Martins, Head of Investor Relations at XP Inc. and on behalf of the company, I would like to thank you all for the interest in our earnings call and make myself and Antonio Guimaraes available for future conversations and any follow-ups that you might have about this call or any other subject. Joining me today for the call are Bruno Constantino, our CFO; and also Jose Berenguer, XP Bank. We will be available for today's Q&A session. You can send your questions in the Q&A tool that can be found on your screen or raise your hand to speak with us. We can actually unmute you for that. Our earnings documents are available on the Investor Relations website, and a replay of this call will be available tomorrow or later today, actually, on the same web page. I kindly ask you to refer to our little disclaimer on Slide 2 and remind that certain statements in this call may relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our reports filed with the SEC. We will begin now the presentation with the quarter highlights delivered by Bruno Constantino. Hi, Bruno.

Bruno Constantino, CFO

Hi Andre, thank you. Hi, everyone, it's a pleasure to be here with all of you once again. In today's conference, we have prepared a shorter presentation to allow more time for the Q&A. I hope you enjoy this format. I'll start with the highlights. Berenguer will provide an update on the banking segment. I'll return to discuss the first quarter KPIs and financials, and then we'll proceed directly to the Q&A. We have also relocated several slides to the annex, which you can access for more details and numbers if you wish. First, the highlights from this first quarter show that it was our strongest quarter ever. All the key performance indicators and financial results are very strong, which will become clearer in the third section. You will also notice the discipline regarding costs and efficiency in our business model, as evidenced by our expanding margins, despite our significant hiring. In the first quarter of 2021, our headcount grew by 64% year over year, adding over 300 new employees—specifically 322—averaging more than 100 hires per month. We anticipate this hiring trend will accelerate as we explore new business opportunities, capitalize on market potential, and invest in technology, continuing our digital transformation journey initiated three years ago, as we previously mentioned. This operational leverage allows us to reinvest in our platform, which we consider a competitive advantage. We aim to reinvest 100% of our earnings into our growth moving forward, given the vast opportunity we see for disruption in the financial system, particularly in Brazil. Now, moving on to investments. We have two key highlights to share. One is regarding international funds. This segment essentially did not exist a few years ago, but we have invested in it and established several partnerships with global players, bringing them to Brazil, some on an exclusive basis. As of March, we have reached BRL 20 billion in assets under custody, which is six times higher year over year, with 120 funds available on our platform. We have also formed new partnerships with Systematica, Nordia for two ESG global funds, and Goldman Sachs for an emerging market bonds strategy. Additionally, we have partnered with Bridgewater for a global macro fund, which will allow retail investors to access this fund with a minimum investment of BRL 500, which is under $100. This achievement aligns with our goal to democratize investments in Brazil, providing small investors with access to one of the most sought-after funds globally. Notably, the investment funds industry in Brazil, according to ANBIMA, has surpassed BRL 6 trillion, yet less than 1% is allocated to international funds, highlighting the growth potential of this segment. In terms of pension funds, the growth potential is similarly significant. Although we are growing rapidly, our market share of assets under custody remains small. Our insurance company, established in 2019, currently holds only 1.6% market share, but we managed to capture 88% of market share for transfers in this sector despite that, illustrating our strong growth trajectory and further potential for expansion. Now regarding banking, I will keep this brief as Berenguer will provide more details. I just want to emphasize the official launch of our credit card, the XP Visa Infinity, in March, and that our loan portfolio continues to expand, growing 22% from the previous quarter with a healthy 0% NPL rate. Lastly, I want to mention that a few weeks ago, we published our 20-F report, which identified three material weaknesses when we went public in late 2019. This is typical for companies like ours transitioning to these standards required by the SEC. I’m pleased to report that we successfully addressed all three weaknesses in our first year as a public company. This dual focus on offense and defense reinforces the long-term strength of our company, and we felt it was important to share this with you. Now, I would like to hand it over to Jose Berenguer, the CEO of our bank, to share some banking highlights. Berenguer, the floor is yours.

Jose Berenguer, CEO of XP Bank

Thank you very much, Bruno. Good evening, good afternoon, everyone. It's a pleasure to be with you today. I will discuss our banking initiative and provide some insights on the banking environment in Brazil. First, we believe something significant and unique is occurring with open banking and instant payments in this market. The changes being implemented by the central bank and regulators will greatly transform banking in the country. I will share some examples as we proceed. To begin with our banking strategy at XP, we are continuing to expand our collateralized debt portfolio, which has now reached BRL 4.7 billion. This is a conservative strategy as everything is collateralized, resulting in zero non-performing loans and, naturally, lower capital requirements compared to standard loans. As Bruno previously mentioned, we launched the Visa Infinity card, achieving higher-than-anticipated activation rates and delivering in the marketplace within two months, quicker than we had expected. We are also advancing our margin loan product, which is a credit line currently in the pilot phase. This will significantly enhance the trading experience. Again, we're discussing collateralized credit, which is associated with very low capital requirements and default rates. To return to the open banking initiative in Brazil, it will encompass various products, marking a departure from what has been seen in the U.K., Europe, or Australia. This will involve corporate clients and SMEs as participants. Products like insurance and investments will also be included, and development will progress in the second half of the year. The Central Bank has consistently stated its goal to complete the initiative by the end of this year. What’s essential is that individual or corporate clients will authorize the financial institution to access their data and provide product offerings within this new database ecosystem. For example, if someone has a car financing loan with another lender, XP or another bank can offer a competitive rate and send them information about the offer simply by accessing the database. This process is substantial and will, as in other regions, include information aggregation systems. Importantly, targeting corporate clients and including other products will create a markedly different scenario from other countries. We believe this initiative will be as transformative as the Plano Real was in bringing inflation to zero in '94 and '95 for the banking sector, giving clients the ability to compare options and select the best products in a seamless user-friendly manner. We are pleased to develop our banking initiative alongside the broader open banking initiative in the market, giving us a competitive edge. With our newer IT platform compared to established players, we also benefit from lower costs as we do not maintain a branch network and compensate our independent financial advisors based on their sales. We expect to have a much more competitive pricing strategy compared to our competitors by leveraging technology, reducing costs, and activating our existing client base, which includes 3 million individuals and around 35,000 to 40,000 corporate clients. There’s immense potential within the SME and middle-market client segments to grow our client base and offer financial products. We will start as we always have, focusing on our current clients before expanding further. We estimate the total financial market in Brazil at around BRL 800 billion, while we currently target less than BRL 100 billion with our existing products. Our strategy will evolve to include more products and effectively engage our existing clients and new ones. Additionally, looking ahead to the short term, we aim to focus on top-tier clients, not just those at the bottom of the pyramid. We serve mass affluent and private banking clients, with the goal of launching a full digital account by year-end. This includes the introduction of debit cards and instant payment tools. We plan to broaden our credit products and insurance offerings while utilizing technology, open banking, positive credit bureaus, and centralized receivables platforms to mitigate credit risks. Our business plan includes options to attract and monetize retail clients through cross-selling investment products and tapping into several open banking opportunities. Starting with high-tier clients, we will gradually extend our reach to lower client segments as we gain confidence in our systems and risk management tools. Our current client base represents the sweet spot of the market, providing collateral for transactions with us. For corporate and SME clients, we aim to scale up our existing offerings such as investments, foreign exchange, collateralized credit transactions, and derivatives. We are also launching an energy trading desk to offer hedging and financing options using energy as collateral. In the mid-term, we will continue to expand our credit offerings and tailor insurance products for our clients. We will also provide cash management tools utilizing instant payments and open banking resources for corporate clients, SMEs, and businesses overall. There are opportunities to enter the acquiring business and enhance our data analytics capabilities. Additionally, cross-selling corporate pension products to our existing client base represents another opportunity. We are very optimistic about our prospects. While we will proceed cautiously in true XP fashion, the sense of urgency is ever-present as we develop new tools and products to serve our client base with a competitive pricing strategy, leveraging our technology and IFA network. In summary, we see a wealth of opportunities ahead and are confident that we will deliver the banking products we've discussed.

Bruno Constantino, CFO

Thank you, Berenguer. That was very helpful. You provided a clear outline of how significant the banking business can be within our ecosystem. It's worth noting that we did not present a slide specifically about strategy. However, Berenguer has already provided a lot of insights into our banking strategy moving forward. The reason for not having a dedicated slide is that we will have an XP Strategy Day in the second semester, where several members of our executive team will share our long-term strategy in greater detail. It’s important to highlight our strategy in the individual market regarding banking. We conducted extensive research with our customers, and we focus on a logical sequence to engage current clients before expanding to other client profiles over time. We began with the credit card and the collateralized credit, as our research indicated these were the most demanded products, more so than the digital bank accounts we plan to launch. We are set to start a pilot for the latter next month, with full operations in the second semester. Thank you again, Berenguer. Now, let’s move on to the first-quarter KPIs and financials, followed by the Q&A. Regarding the KPIs, you have already seen them. We have shared some banking KPIs: BRL 715 billion in AUC and 3 million clients. DARTs were exceptionally strong at 3.2 million, compared to 1.7 million in the first quarter of 2020. Remember, last year's first quarter was heavily impacted by the pandemic, particularly towards the end of February and March, which resulted in significant activity, and we saw a 91% year-over-year growth. This is impressive. Regarding the banking KPIs, Berenguer mentioned the BRL 4.7 billion figure; the credit card is entirely new, officially launched in March, and there is a natural progression as people request, activate, and start using the card. In the first quarter, we recorded over BRL 500 million in TPV transactions using our credit card, all with a 0% NPL ratio. Looking at the financials, we achieved a record gross revenue of BRL 2.8 billion, which is a 50% year-over-year growth. Our adjusted EBITDA, accounting for share-based compensation, exceeded BRL 1 billion, setting a quarterly record. Our adjusted net income reached BRL 846 million, more than doubling the net income from the first quarter last year, with an NPS of 74%, indicating a very high level of customer satisfaction. Now regarding the net new money, we previously discussed other KPIs. The net inflow for this first quarter was very strong at BRL 69 billion when adjusted for extraordinary inflows and outflows, primarily linked to equity custody. These inflows and outflows are crucial as they mainly come from high-net-worth individuals and tend to be more uncertain, so we prefer to be transparent about them to avoid misalignment in market projections for the upcoming quarters. However, we would certainly welcome extraordinary inflows more frequently. Excluding those, we still achieved a robust net inflow of BRL 43 billion this quarter, the highest in the past four quarters, averaging over BRL 14 billion monthly. This strong momentum reflects the investments we've made in our IFA network. Additionally, XP Direct is growing steadily. It's important to note that there isn't one specific channel driving growth; it’s widespread across all brands and channels, with both XP Direct and the IFA channel performing well in terms of net new money. Regarding revenue, I mentioned the 50% growth before. In the last year, retail has been the primary driver of that growth, accounting for over 90% year-over-year growth and representing 75% of our total revenue in the first quarter. Moving to retail revenue, as I indicated, the growth here eclipsed overall company growth, rising by 67% to exceed BRL 2 billion in the first quarter. Again, all products and channels were strong this quarter, indicating very diversified and high-quality results, as we cannot highlight one product over others. Equities, futures, financial products, and fixed income all excelled in the first quarter. In terms of take rates, despite the introduction of zero brokerage at Clear and a 75% reduction at XP near the end of last year’s third quarter, we maintained a stable take rate of 1.3%. When discussing the future, I typically refer to stability because our past trends indicate that. It’s essential to note that, even though we lacked the online brokerage revenues we had in the first quarter last year, leading to a challenging comparison, we more than compensated for this through the growth of our other products and platforms. It’s also crucial to highlight that nearly 80% of our net income from financial instruments ties back to retail segments, emphasizing our position in the financial sector. Moving to EBITDA, in our last call, we opted to present our operating results to sidestep discussions regarding the low effective tax rate. As stated earlier, our adjusted EBITDA for this first quarter exceeded BRL 1 billion, a record with 75% growth. This demonstrates the advantages of our operating leverage model. As I mentioned previously, we’ve invested heavily in improving technology and user experiences in our existing business and will continue, particularly in new ventures. Despite these investments, we are maintaining a scalable business model, which reflects clearly in our operating results. Additionally, our adjusted EBITDA margin expanded by over 500 basis points despite rising headcount and other factors, showing the scalability of our business model. The adjusted net income reflects all that I mentioned plus the low effective tax rate. We more than doubled our adjusted net income from BRL 415 million in last year’s first quarter to BRL 846 million this year, with a margin increase from 23.9% to 32.2%. On the right, you can see the benefits I pointed out: 50% revenue growth; operating leverage allowing EBITDA to grow at 75%, resulting in a margin increase of over 500 basis points; and adjusted net income rising over 100% due to our corporate structure, leading to an expansion of more than 800 basis points in margins. Before we proceed to the Q&A, I want to reiterate a few points that Berenguer and I discussed during the presentation. First, the revenue pool size, which is close to BRL 800 billion, encompasses the financial system in Brazil. Based on our last 12 months' revenue, we are only capturing a little over 1%, around 1.2% to 1.3% of this pool. Our aim is to capture most, if not all, of this revenue pool on our journey, which is why we emphasize that we have a long road ahead. What is our strategy? As Berenguer indicated, we started at the top, targeting the most lucrative and difficult market segments—investments among the affluent and private sectors. We aim for profitability and possess an entrepreneurial spirit and long-term vision, using our pricing power for the benefit of our customers. As Guilherme outlined in his letter, it's vital to establish connections in a logical timeline that makes sense, which is precisely what we are pursuing. This aligns with our purpose as well. The value proposition we provide to both existing and prospective clients must be clear, transparent, and foster sustainable pricing for the company and its customers. We believe numerous pricing strategies in the market are unsustainable, at least from the customer's perspective. Lastly, in the second semester of this year, though we don’t have a specific date yet, we will announce our XP Strategy Day, where we will delve deeper into our long-term strategy. With that, I now open the floor for your questions.

Andre Martins, Head of Investor Relations

Great, Bruno, thank you very much. Thank you, Berenguer, for such a thorough presentation. The first question is from Jorge Kuri from Morgan Stanley. We'll unmute you, Jorge.

Jorge Kuri, Analyst

Hi, everyone. Thanks for the presentation, and congratulations on the very strong numbers. I wanted to ask you about margin expansion. At the EBITDA level, 535 basis points year on year, 247 quarter on quarter, how do you see this level of margin? Is this sustainable going forward? Is this a level that should be the basis for the buildup of your business ahead or if you have strong investments to make that will probably bring down the margins closer to where they were, say, last year? And if you don't mind, let me just add another one because it is related to the margin, which is the tax rate, this is obviously to the net margin. But the tax rate has been surprisingly now. You started in 2018 and certainly 2019 at around 23%; in last year, in the teens; and now we're at 6%. So what is the right level? And evidently, 6% is too low. But, yes, I don't know, maybe no. So those are my two questions. Thank you very much.

Bruno Constantino, CFO

Thank you, Jorge. Yes, it's challenging to predict the margin going forward as we've encountered some technical difficulties.

Andre Martins, Head of Investor Relations

Bruno, your connection seems to be a bit unstable. Perhaps you could make some adjustments? Yes, it's a bit difficult to hear.

Jorge Kuri, Analyst

Turn off the camera. Maybe it will help.

Bruno Constantino, CFO

Let me see if I can improve that. Is that any better, or is it still not clear?

Andre Martins, Head of Investor Relations

No. It's not, Bruno. You're breaking.

Bruno Constantino, CFO

So, yes, I will hang up and get in again. Let's see if it gets better. OK? Just one sec.

Andre Martins, Head of Investor Relations

Sure. Let's just wait for Bruno to come back.

Jorge Kuri, Analyst

Thank you. Thank you.

Bruno Constantino, CFO

Is it better?

Andre Martins, Head of Investor Relations

Perfect.

Bruno Constantino, CFO

Can you hear me well? I apologize for the earlier issues. Jorge, regarding your question about the margin going forward, it’s challenging to forecast due to the significant investments we’re planning. We're looking at a total revenue pool of nearly BRL 800 billion in the financial industry, and we aim to tap into that, which will necessitate considerable investments on our part. Nevertheless, our business model demonstrates strong operating leverage, as reflected in our numbers. For instance, in the short term, we intended to hire over 320 employees in this first quarter. However, finding the right individuals who fit our culture can delay the process. We hope to speed up hiring in the upcoming quarters compared to the first quarter. This increase in headcount will impact our SG&A expenses and consequently lower our margins. However, we anticipate continued revenue growth and business expansion. The revenue mix will also play a role in our margins. Currently, part of our margins is not reflective of a mature stage since we've been investing heavily and have yet to see the corresponding revenue. We will continue to invest moving forward, so I don't foresee strong margin expansion in the upcoming quarters as we maintain our investments. The speed at which our new business endeavors grow will also be a factor. Regarding the effective tax rate, we have a slide on Page 22 for further details. Essentially, our effective tax rate will change based on our revenue mix and where most of our revenue originates. Our financials indicate a 6.4% effective tax rate. When accounting for share-based compensation, a non-cash expense generating a non-cash tax credit included in our financials, if adjusted, our effective tax rate would rise from 6.4% to 12.1%. This would add BRL 67 million to our income tax for the first quarter. Additionally, the corporate structure affects how we recognize revenue from our proprietary funds. Most of the flows are a result of proceeds from our IPO in 2019 and the follow-on in December, with revenue recognition occurring net of tax, contributing directly to our bottom line. The revenue appears higher than what we reported for the first quarter, which was BRL 105 million. I believe the revenue should have been around BRL 2.9 billion, considering that. However, when deducting the tax provision for cash redemptions from the funds—subject to a tax rate between 15% and 20% depending on the fund structure—we adjust our numbers accordingly. This would increase the effective tax rate to 20.8%, with 17.4% attributed to that adjustment and the share-based compensation benefit raising it to 20.8%. In quarters with strong revenue from XP Inc. directly, we’ll see a lower effective tax rate. Conversely, when revenue from XP Inc. is less and more is derived from other group companies, our displayed effective tax rate will be higher.

Jorge Kuri, Analyst

Thank you, Bruno. That's clear.

Bruno Constantino, CFO

Thank you, Jorge.

Andre Martins, Head of Investor Relations

Okay. Next question is from Otavio Tanganelli from Bradesco.

Otavio Tanganelli, Analyst

Hi, guys. Thanks for taking my question. I wanted to understand a little better the margin expansion trends, especially because in the quarter, there was more relevance of the retail revenue. So what's really driving this margin expansion? So probably, obviously, credit is gaining more relevance, and that probably has a 100% margin as well, does not entail a lot of COGS. But if you could give us a little more color on that would be very helpful. Thank you.

Bruno Constantino, CFO

Thank you, Otavio. The growth we experienced was broad-based across futures, equities, and fixed income. This revenue from our proprietary books and flow books contributed to margin expansion, benefiting from the scalability of our business. It's important to note that the banking revenue was quite small in comparison to our total revenue, representing less than 2% of it. Although the bank offers many new products, they are still in the early stages of scaling and are not significant at this time. The margin expansion I referred to during the presentation relates to our business model. All product lines performed well, and in the first quarter, we generated stronger revenue than in the fourth quarter, despite typically not having performance fees due to seasonality. The trading activity was notably robust, as reflected in our DART numbers. This growth is widespread across the business, and it can't be attributed to just one factor; it's the cumulative effect of various elements.

Otavio Tanganelli, Analyst

Very clear, Bruno. Thank you.

Andre Martins, Head of Investor Relations

Thank you, Otavio. Next is Mr. Tito Labarta from Goldman Sachs. Hey, Tito.

Tito Labarta, Analyst

Hi, Andre. Hi, Bruno. Hi, everyone. Thanks. Can you hear me okay?

Bruno Constantino, CFO

Yes.

Tito Labarta, Analyst

Great. Thank you. Thank you for the call and taking my question. My question is on, I guess, on the inflows. Right? Even if you exclude the nonrecurring inflows, still the highest level we've seen. If you can give some color, how do you see that evolving this quarter, throughout the year? Can that continue to increase? Just to get a sense of the inflows.

Bruno Constantino, CFO

Yes, you're correct, Tito. The inflows were higher than in the previous quarter. It was BRL 14.3 billion, if I recall correctly, compared to BRL 12.2 billion on a monthly average in the last quarter. All channels performed well, but if I had to highlight two, I would mention the high net worth and the IFA. Some of this success can be attributed to our investments in the IFA network, which were made possible due to competition. Our IFA network is effectively utilizing the funds, seizing opportunities presented by the early financial dip in Brazil and the banks' trend of closing branches, which is expected to persist in the coming years. This has been beneficial for our business. Looking ahead, I see a very positive trend from the first quarter, and I anticipate this will continue, but we will see.

Tito Labarta, Analyst

Great. Thanks, Bruno. I guess a follow-up on that, more on the IFAs. Right? You've been investing a lot in IFAs. There was a lot of competition last year, but I guess one, do you expect to continue to investing in the IFAs as much as you have? Will you continue to see a big increase in IFAs? And how long does that take for an IFA to sort of get to a level where they're bringing a lot of inflows?

Bruno Constantino, CFO

Yes. We expect to continue investing in the IFA. We want to. We think it's a very good use of capital in our business model. And competition is still there. It's going to be there. As I've said, I don't see competition reducing in the future especially because of our own success in our business model. And we just have to keep moving forward faster and focus on the kind. So it's more of the same in that sense. Of course, last year, we made a lot of investment already. So the pace of future investments should not be like last year, but we are going to keep investing. And the maturity of the IFAs, hiring new IFAs, and bringing money, it depends on the profile of the new IFA, but usually, it matures after six months. So there is a lag in there from six to 12 and depending on the IFA can break even after 12 months or 18 months.

Tito Labarta, Analyst

Great. Thank you, Bruno.

Bruno Constantino, CFO

Sure.

Andre Martins, Head of Investor Relations

Thank you, Tito. Nice to see you or at least hear you.

Jorge Kuri, Analyst

Just one additional question, just going back to the opportunity on the banking side and particularly, the credit book. I think you've reached 0.7% of AUC in terms of credit book to AUC. Now that I think you had more time since you launched the product, what do you think is the real potential in terms of AUC for the credit book?

Bruno Constantino, CFO

This credit book you mentioned pertains to collateralized credit. When discussing credit, it’s important to recognize the various types available. If we only focus on our current offerings, we may overlook future opportunities, as we anticipate many more credit options will emerge. Previously, we indicated that our credit book could represent 2% to 3% of AUC. It’s still too early to determine if that estimate is overly cautious or ambitious because both AUC and our credit book continue to grow rapidly. I can tell you that we see significant potential in this area. However, as Berenguer highlighted, we will approach this responsibly, focusing on understanding our clients, assessing risks, and utilizing capital markets when necessary. An important aspect of our strategy is that XP is deeply integrated into the Brazilian capital markets. Our experience and investment in these markets allow us to develop secondary trading and provide more products for our retail clients while also supporting corporate clients. Although Brazilian capital markets still have room for growth, they have made considerable progress in recent years. When we consider future credit opportunities, we know several asset managers are interested in acquiring various types of credits. Therefore, we can leverage capital markets to support the ecosystem without holding excessive credit on our balance sheet. While we do intend to carry some credit in our balance sheet, as we expand, we will also recycle through capital markets, which we believe is an effective strategy, all while maintaining an asset-light business model. Berenguer, do you want to add anything to what I just mentioned?

Jose Berenguer, CEO of XP Bank

I think it's spot-on, Bruno. I think you covered all the angles. Thank you.

Gabriel Gusan, Analyst

Hello, guys. Good evening. My question is about pension plans. So you mentioned you have 80% of market transfers in March in those products. I'd just like to understand that, if you check the figures that you said, they are much lower. They're still impressive, but something around 36% is what we had for February. And I'd like to understand, does this 88% consider funds that you're distributing for GPLs and VGPLs that you're distributing from other managers and from under other insurance companies. Is that why you have that big of a difference?

Bruno Constantino, CFO

No, it only considers our own insurance. We also distribute from other insurance partners on our platform. The 88% is for March. If you look at the first quarter, on average, it's around 45%. There is a lot of volatility on a monthly basis because of all the transfers involved. The important point is that 88% is only for March, not the first quarter. If we take January, February, and March into account, it would amount to 45% of all the transfers. The total for the system was BRL 8 billion, and we received BRL 3.6 billion in the first quarter from those transfers solely for our insurance, which had total custody of just over BRL 16 billion as of March. Essentially, we rank No. 1 or No. 2, depending on the other players with the highest assets under custody, who experience natural inflows in that business. With less than 2% market share, being No. 1 or No. 2 is challenging, but we've achieved that in several months. The opportunity here is significant. We believe we have the best pension platform in the market, offering various products and a digital experience for our clients, and we anticipate continued growth. This business has a different growth profile than investments but remains connected due to client inertia in the pension sector being lower. It's a fascinating business as it fosters a long-term relationship with clients. As I mentioned, our focus is on building deep, enduring relationships with our clients, and pensions are strategic to that goal.

Andre Martins, Head of Investor Relations

Great. Thank you very much.

Bruno Constantino, CFO

Thank you, Gabriel.

Andre Martins, Head of Investor Relations

Okay. I think we're done for the Q&A. Thank you so much, everyone, for the interest and for your questions. We hope that was helpful. Again, we are available for any follow-up that you'd like in the next days or so. Myself, Bruno, and Antonio are all available. So, Bruno, I don't know if you want to deliver some closing remarks, but thank you all for the interest, and have a great week.

Bruno Constantino, CFO

I just would like to thank you all for participating again. Thank you, Berenguer, for participating here with us. And I'll remind you that on the second semester, we're going to have several of our senior partners and C-level together in XP Strategy Day. Myself; Berenguer; Thiago Maffra, that's going to be the new CEO next week; Guilherme Benchimol, our founder, next week, the executive chairman; and other partners, so we can give more color about our long-term strategy. But bear in mind that we are very optimistic about the long term. I don't like to answer your questions about the short term, the quarterly results. I understand that everybody has to model it. But I think that the big picture here is the BRL 800 million revenue pool. We have entered in our history in several different businesses. We started as mono products, mono clients, retail, equities. And you look at us now, we have been able to diversify, to be entrepreneurs, successful entrepreneurs, and we hope that's not going to be different in the other segments that we want to address. We believe to have the brand, to have the culture, to have the money and the mindset to do the will to do it. So we are very optimistic about this long journey ahead of us. So thank you one more time, and see you on the next quarterly results. Have a great night. Stay safe.