Good evening, everyone. Thanks for waiting. We’re just giving up some seconds for everyone to join. I’m Andre Martins, Head of Investor Relations. And on behalf of the company, I’d like to thank you all for your interest in our quarterly earnings call. Today, we have with us Bruno Constantino, our CFO. We will both be available for the Q&A session right after the presentation. Remember that you can raise your hand in the Zoom tool, I see that as usual we have some raised hands, and we will answer them after the presentation. Please refer to our legal disclaimer on Page 2. There we have – we clarify actually the forward-looking statements, their definition, and on our IR website you can find additional documents to forward-looking statements and why they might differ from actual results. So without further ado, I’ll pass the word to Bruno Constantino, we have a lot to talk about today. And it’s later in São Paulo, right, Bruno, than usual. So let’s get going with the presentation. Thank you so much every one of you for the interest.

Sure. Thank you, Andre. Good evening, everyone, a pleasure to be here with all of you one more time in our 12 [ph] earnings call. This call might take a little longer than usual. But, I promise, I’ll try to be as brief as possible, so we can jump into Q&A. So we can move to the highlights. So here on Slide 5, the highlights, we have selected 4 main highlights for third quarter 2022. First is the improvement in our disclosure, always considering feedbacks from investors, and thinking about how to enhance our transparency over time. We have changed 3 points in our managerial disclosure. We have incorporated, Digital Content into Retail. As you know, Digital Content is an enabler, much more than our relevant contributor to our revenue. So it doesn’t make sense to disclose it on a standalone basis anymore. Number two, we separated Corporate clients, companies with annual revenues above R$700 million annually from Retail clients. This change was motivated by: one, growth of the Corporate business, which was irrelevant until the end of 2021 last year, and has been gaining traction throughout this year, as you’re going to see throughout the presentation as well; and number two, different profile of clients as well; and third, we have opened the Retail revenue base on its main product classes, I think this is the main change in terms of disclosure that we are making from now. What are the main product classes? One, Equities; two, Fixed Income; and three, Funds Platform. I hope that will help all of you understanding the dynamics of each business line depending on what the macro environment is. The second highlight is about expenses. We’re still absorbing the impact of headcount growth in 2021, as you know. But we do believe that our ongoing transformation should result in efficiency gains and better margins in 2023 onwards. Our total SG&A as you’re going to see already showed this quarter signs of stabilization. I will talk more about that as well. And third highlight, we are discontinuing the adjusted net margin guidance. And as of today, we introduce in exchange of the adjusted net margin guidance, a new earnings before tax margin that will take into account the expenses related to share based compensation. And finally, the last point is just an announcement that we have just released the 6-K informing about the increase in our actual share buyback program, moving it from a total of R$1 billion to R$2 billion, and keeping the same timeframe, which is until May next year. So, moving to the next slide, starting with Client Assets. So all time high Client Assets R$925 billion helped by higher interest rates. That tends to increase, as you know, total Client Assets. Net new money has been decelerating from an average of R$14 billion per month in fourth quarter last year to R$11 billion in third quarter this year. But it’s still between the soft guidance of R$10 billion to R$15 billion net new money per month. There is, as I’ve said, when you have two facts added together, it makes the scenario poses a very strong headwind for net new money growth, which is not only higher interest rates, but higher interest rates coupled with uncertainty investors tend to choose daily liquid Fixed Income instruments instead of allocating their capital in anything else, especially in the third quarter. We also had inversion in the interest rate curve. And that makes even harder to make investors extending their duration. So there is a scenario that poses a headwind, it’s not new, it’s been with us throughout this year. But we are able to keep the load and of our soft guidance despite all of that. And then, we have on the right side the breakdown of Retail Client Assets per products as we have done in terms of Retail revenue, we also are going to disclose the total Retail Client Assets break down by the same buckets, and here it’s pretty much clear from year-over-year view mix shifts in terms of investment allocation. We had in the third quarter last year 42% of total Retail Client Assets. In Equities, that number decreased to 34% third quarter this year, when we look at Fixed Income is the opposite. It was 22% last year; it increased to 30% this year. So everything that we already have been talking and you know, but now putting figures on it. So, moving to the next slide here is just to show what we have done. So the old segmentation was Retail, including Corporate, Institutional, Issuer Services, Digital Content and Other. And now, we have many more details. And the segment’s Retail, Institutional with Corporate not with Retail anymore, it’s together with Issuer Services. There is a lot of cross-selling their Corporate clients and investment banking activity. So we believe it makes sense to put it together. And in Retail, we have, as I said, opened the 3 main revenue streams of Retail revenue, Equities, Funds Platform and Fixed Income and all the others are part of the new vertical, Digital Content is included in Other Retail. Now, talking about gross revenue. Our total gross revenue went from R$3.4 billion third quarter last year to R$3.8 billion this year, a 13% increase. This risk-off scenario has mainly impacted our Retail revenue. That represents as you can see on the right side of the chart, close to 70% of our total gross revenue. So, Retail, in the third quarter represented 69%, 9 months; 71% of total gross revenue is the main component of our revenue, and is the part of the revenue that has been impacted the most, because of the bear market. A natural consequence of that is a deceleration of our growth pace, but it’s still a growth, 13% as I said year-over-year, 5.4% quarter-over-quarter. But as we also had been saying, thanks to a more diversified ecosystem part of Retail revenue, especially the new verticals, we’re going to show and also outside with Retail revenue, Institutional revenue, and Corporate and Issuer Services revenue, have a different dynamic in such a tough scenario, helping the overall results of the company. That is why we believe XP has been building over time, even more resilient business model. And that’s what makes us believe, as Maffra mentioned in his letter to stakeholders that our strategy is in the right path, going beyond investments, and in investments adding more products and services. So we can keep diversifying our revenue stream, increase the loyalty of our clients and also the LTV of our clients. Imagine, if XP nowadays in this scenario that we’re leaving, where XP back 10 to 15 years ago, when we were mono product, Equities and mono client Retail. And move to Retail right now, yeah, this slide I will take a little longer if you allow me, because that’s new, all the numbers here. It’s completely new, and we’re going to share with you every quarter from now on. I will explain a little bit the dynamics of each block. It’s pretty much straightforward the impact of macro when we have a boom market, Equities benefit the most from it, Funds Platform also benefits from it, Fixed Income is hard to tell depending on which moment of the boom market you are, when we have a bear market is the opposite Equities. They get hurt. Funds Platform also gets hit by the bear market and Fixed Income benefits mostly because of higher interest rates. But here is interesting to look at the relevance of those 3 blocks that we’re showing right now, Equities, Fixed Income and funds added together. In third quarter last year, they represented 86% of total Retail revenue. In third quarter this year 2022, their relevance decreased from 86% to 72% of total, a very relevant decrease in relevance. But it’s still the most relevant block of Retail revenue by far compared to all the other components. What explains that decrease the bear market scenario? And these headwinds have taken away more than R$1.5 billion in revenue from our results in 2022. How do we get to that math? You just add together, Equities and Funds Platform, for example, in the third quarter this year, it will give you roughly R$1.4 billion. And you compare to Funds Platform in the third quarter last year to keep the same seasonality, that we’ll reach R$1.8 billion, so this R$400 million per quarter if you annualize that you would reached almost R$1.5 billion in annual revenue profit. Now, another way to see this impact that I’ve been mentioned about this headwind including Fixed Income, you can include a Fixed Income just to get the 3 main blocks of our Retail revenue. And Fixed Income is the positive number, comparing year-over-year, okay, but let’s add it together, you’re going to see that those 3 blocks added together even with Fixed Income, they decreased year-over-year 15%. So, here, we can do all the math you want to, but it’s going to be pretty much clear, why Retail is suffering in terms of revenue and revenue mix. Despite all of that Retail has been able to deliver strong revenue numbers that has to do with all other components of the Retail revenue, Fixed Income helping other that mainly, it has other things there. But as there is in the note, Float, Digital Content, FX, and among others, everything that is not embedded in any of those blocks goes into other, but float is more than 80% of that revenue. So Fixed Income, Float and all the new verticals, retirement plans, cards, credit insurance, they all have been helping Retail revenue to keep a very healthy number. And it’s still growing year-over-year, despite this headwind that I’ve been talking about. Another interesting data that we can extract from this chart is a comparison quarter-over-quarter, when we look third quarter 2022 compared to second quarter this year is a different real. Basically, Equities, for example, it’s grown 5% similar to our debt [ph] number the daily average trading number that grew 3% whatever [ph] Funds Platform here decreased 29%. But if you take out, because then when you compare quarter-over-quarter, there is a seasonality, okay. So second quarter, we have performance fees, when you take out performance fees, third quarter increased close 10% quarter-over-quarter. So the two main blocks that have been hit the most year-over-year, quarter-over-quarter, they show sign of stabilization, which is a good thing in my view. So, looking at the other components that I mentioned, new verticals, the growth it goes from 45% year-over-year up to 170% with cards. Cards has been growing a lot 26% growth quarter-over-quarter. So this is, I think, the main slide of the presentation where you can drive many different conclusions, but it shows hopefully the impact of this macro environment in our Retail revenue as a total. So we can move to the next one, Take Rate. So Take Rate is that Retail revenue divided by average AUC as you know. Now, what is the difference now this Take Rate is taken into account Retail revenue, ex-corporate revenue that went together with Issuer Services and the Client Assets, the total Client Assets, we are only doing the Take Rate for Retail, using Retail Client Assets for sure. So the Take Rate 1.33%, it was 1.40% in the second quarter. But in the second quarter, we had the performance fees, as I said, you take out approximately 8 basis points of performance fee, we have 1.32% with 1.33%, again, a signal of the stabilization. On the right side, we highlighted Funds Platform and Retirement Plans. Why have we done that? Because we believe when we think about Take Rate as a price, so relating to the Client Assets, and then as a price, those two components of the Retail revenue or the components that makes more sense relating to Client Assets, Funds Platform and Retirement Plans, because all the others Equities, Fixed Income and the other verticals. Especially Equities and Fixed Incomes, they have a lot of revenues that are transactional base instead of client asset based. But going back to Funds Platform and retirement plans, we are not considering in the Funds Platform performance fees here. What do we see is the same movement shift away from equity and moved market funds that have higher management fees into Fixed Income funds. So the Take Rate went from 71 basis points last year to 55 basis points this year, 16 basis points contraction. But again, quarter-over-quarter, a slight increase of 1 basis point, so basically flat quarter-over-quarter same season. Now, going to Corporate and Issuer Services and Institutional. On the left, Institutional; on the right, Corporate plus Issuer Services. Here both revenues, both segments, they performed really well in the third quarter. It’s a fact the numbers speak for themselves. Institutional more than double year-over-year, Corporate and Issuer Services increased 34% year-over-year and quarter-over-quarter, both of them grew more than 30% quarter-over-quarter. So third quarter, no doubt was a very strong quarter for Institutional and Corporate plus Issuer Services. We believe there is a relation with the elections in Brazil, a lot of anticipation, the positive impact in the OTC derivatives trading that we do with our clients, either Corporate or Institutional clients. So this shows the benefit of the diversification, it’s very positive, anticipating myself that I expect a question in the Q&A in the fourth quarter. We do not expect those 2 segments to perform as they did in the third quarter. It’s natural to think that if there is and spatially in the third quarter, because of elections, you need like a transitional period like hangover to absorb everything that has been anticipated. It’s hard to estimate how much, but the concept behind the fundamentals, I believe that third quarter should be the record quarter for 2022 in those two segments. And one more thing that I forgot to mention about Issuer Services. It’s interesting to note that in our – we had this quarter and all time high quarterly securities placement revenue of R$525 million, you can see that in our earnings release that number is as per our accounting income statement. Okay. Out of the R$525 million, we have R$228 million in the third quarter here in Issuer Services, but everything is kind of related. The other part of the revenue goes into Retail, it’s mainly distribution fees, and they go into Retail in different segments. So it was an all time high of securities placement revenue in the quarter that we still are in a bear market, not Equities playing a role, because ECM is really weak. But the DCM and also alternative funds playing an important role in this quarter. SG&A and earnings before tax margin, so total SG&A has been flat quarter-over-quarter, I believe, that’s a good thing. The apparent growth in Non-People you have the breakdown here on the left are People and Non-People that are included in total SG&A. So the apparent growth in Non-People expense quarter-over-quarter from R$374 million to R$405 million is lower than it shows. Why is that? I talked about a reclassification from the precision amortization into SG&A. You can see that also in our earnings release, depreciation quarter-over-quarter decreased approximately R$12 million and that’s most of it a reclassification between lines, okay. So discounting these effects, Non-People would have grown 5% quarter-over-quarter. And remember that in the third quarter, we also have our annual event expert that the expenses embedded in there. We also can see an EBT, earnings before tax margin on the right part of the slide recovering, so we had our lowest EBT margin in the second quarter 25.3% coming from 28.6% in the first quarter, and third quarter already shows a recovery go into 27.2%. We are giving this new guidance of EBT margin from 26% to 32%. We tend to be always conservative in our guidance. As you know, we had 25.3% EBT margin in the second quarter of this year. But it’s our expectation that, as I mentioned, the ongoing transformation in the company, no matter what the macro environment is looking at the signals that I also mentioned of stabilization in those revenue lines that get hit the most by a bear market compared to a bull market. We believe we are going to scale up our EBT margin from 2023 to 2025 in the next 3 years. So next year, you could expect our margins closer to what it is nowadays and increasing a little bit moving towards the 32% the top of the range in 2025. That’s what we’re going to fight for here in the company, and also in terms of expense growth for next year, when we look at total SG&A and also people expenses, we, for sure, are going to have a lower growth than we had this year compared to 2021, no question about it. Net income and net margin here, it’s a record net income helped by the earnings before tax quarterly that we have in the third quarter. It was the third higher EBT in our history, only behind the fourth quarter of last year and second quarter of last year. But remember that second and fourth quarter usually they can have seasonal revenues that the third quarter doesn’t have performance fees and also helped by a positive account tax expenses, so record net income ever. We also kept a health margin here at 28.5% in the third quarter. Our basic earnings per share is growing a little bit more than our net income that’s related to the buyback in place. And our adjusted net income, although, we are not using anymore the adjusted net margin as a guidance, we’re going to keep our adjusted net income in our spreadsheets in our Investor Relations site in the internet. Finally, we have two more slides to share with you. This one is about the net asset value. We’ve had several doubts mainly in the last two quarters about our cash flow conversion, cash flow generation and capital allocation. So we thought it in a way to bring here and share with all of you some slides that hopefully they will help to understand better those issues. So, first, it is complicated issue, especially considering that XP is a platform, but also is a financial institution. So we hold several types of financial instruments with different characteristics in our balance sheet. I’ve said that before, so when you go into our cash flow statement that follows an accounting rule, it’s not business sense to analyze that. We are working on a better managerial cash flow statement to help you to understand exactly what our cash flow generation, if you may say, it is. But the way we look internally here is to our net asset value that could be an analogy to our net cash. What is it? It’s basically the adjusted gross financial assets that you have on the left parts of this slide. And that we have been sharing with you through our earnings release minus our debt instruments that are not embedded in the adjusted gross financial assets, because the adjusted gross financial assets take out the financial liability. So anything that goes into our result, says, NII, net interest income, is because there is a financial liability associated to it. It’s already embedded in the adjusted gross financial assets. But we also have corporate debt that is not embedded in there like the bond that we have is like the debentures that we have issued. So like the IFC debt that we still have in our balance sheet. So all of the borrowings, the corporate debt that we have is, what we’re calling here, the gross debt on the right part of the slide. We discounted from the adjusted gross financial asset reaching the net asset value, which at the end of this quarter was R$9.8 billion. And the last slide, we want to present a bridge. A bridge that explains a little bit the way we look at it internally in the assets allocation. So what we have here? Starting with December 2019, until September 2022, we’re talking about 2 years and 9 month after the year of our IPO. On December 2019, our NAV was R$6.4 billion has already considering here the proceeds from the IPO, then we have a total net income of R$8.5 billion plus R$1.4 billion of a follow-on that we did on December 2020, if you add R$8.5 billion, R$1.4 billion to the R$6.4 billion of NAV. At the beginning of the period, we should have if net income conversion rates to NAV was 100%, R$16.3 billion of NAV. But we have a little bit less than R$10 billion. Where did the money go? What happened with the company throughout those 2.9 years roughly? So you have the bridge here showing what happened. Most of the money, if you take out the share buyback, that is R$0.5 billion, and R$0.3 billion is basically working capital. And that’s also tricky, I mean, R$0.3 billion in a period of 2.9 is nothing. But we always are going to have some variation between quarters, because between quarters NAV can fluctuate a lot in terms of the working capital. For example, tax reasons for share-based compensation reasons and other reasons that might have this fluctuation. But when you extend the period, these effect gets, of course, diluted. But the main thing here to highlight is the R$4.2 billion in investment in our IFA Network, and the almost R$1.5 billion in M&A. So here we add together R$5.6 billion of investments that we have made. In those investments, they are not financial assets per se in the sense that we’re using our adjusted gross financial assets. So they get – they’re not included there. And that’s why they reduce the NAV, right? And we – as Maffra also stated in his letter, we believe that the investment that we decided to do in our distribution network was important that competitive advantage that we have, we were able to sign long-term contracts with our IFAs. And, of course, all of the transactions including M&A as we always look to several metrics. But the two main metrics are payback and return on equity, and we consider all of that in our decisions. And also M&A is small. I have said already that we are not planning to do any relevant M&A going forward. We already have the deal with model [ph] waiting for approval of the central banking in Brazil. So the message here is this R$5.6 billion should be much lower going forward. That’s exactly one of the additional reasons that we decided to increase our share buyback program in place, because we’re going to have more investments as we have had throughout these years, especially in the IFA Network. But nothing compare to the size of what we have done in the past, except for the – a little bit more than R$1 billion that we already have committed. But we have not done yet with our IFA Network in terms out the broker dealers that we’re going to be minority shareholders of our IFA. So except for that, the other is more of the same. It’s basically investments that we do on an annual basis. Considering that we have distribution network that is the biggest one in Brazil. So with that, I will stop here to open for Q&A, and then we can answer doubts that you might have. Thank you very much.

A - Andre Martins: Thank you, Bruno. So let’s go to the Q&A. Our first question comes from Tito Labarta from Goldman Sachs. Hey, Tito?

Hi. Yeah. Can you hear me? Good evening, Bruno and Andre. Thanks for the call. Thanks for all the additional information that’s very helpful and useful to think about and help us model the business. So appreciate the color. A couple of questions, I guess, one, just looking at the retail revenue breakdown, right, you show there that other line has increased a lot, I think. Is that – should that be just mostly a function of the higher interest rates that we’re in right now, and as rates come down that should come down? And second question on the inflows, and I used to have the guidance, the 10 to 15. Have you seen any – we saw the equities picked up a little bit into Q – I would expect in lower interest rate environment should be positive for that, but with markets doing a little bit better. Any visibility there in terms of the inflows either like by segment, are you seeing more interest in equities, it’s still more like fixed income, just to try to get a sense of when there can be an inflection points on those inflows kind of longer term?

Yeah, the other retail, most of it is flows, revenue, that is a retail revenue, and goes into other. That’s the most relevant one. Okay. Regarding your second question about client assets inflow, net client, net inflow, both. It’s what I said, zero. When you have uncertainty as an individual investors, a fluent client, with a lot of uncertainty in the market, where if you’re going to buy a longer duration, secured, fixed income security, you’re going to get a nominal remuneration that is less than the one that you can have with daily liquidated, and then it makes hard, it’s a headwind, and even in that scenario, net new money that is about R$10 billion as per month. In a scenario like that usually people they freeze, they wait, they don’t have to, they have an instrument that is daily liquid based on a nominal terms, more than extending the duration. So it’s not easy. You need to do a lot of explanations. And that’s why advisories are so important in a scenario like that. But it’s not an easy sell. And that’s what explains in my view, the weaker net inflow. We have seen stabilization across all signals, but not a reversal yet. We still have a lot of uncertainty upon us. You have a global inflation. You have a global recession. You have higher interest rates, where Fed funds are going to stop. You have a war still going on. You have a lot now. So many things happening, Brazil has a new government that needs to tell about what the fiscal policy is going to be, and so on. So, too much uncertainty, in my view, to see a reversal. But the good thing is, it has stabilized. So, I think, with – the worst is behind us. That’s the point.

Great. Thanks, Bruno. Thanks. I’m just looking, because you also disclose the assets sort of by segments. So just how much of like Equities was up like R$30 billion, but I don’t know how much of that which is the market performance versus potential inflows, because looking at the fixed income, it was like R$20 billion last quarter, down to R$20 billion, so just to try to understand what drove the increase in net assets by segment?

You mean the equity in the third quarter going to – compare it to the second quarter?

Yeah, if we look on the breakdown of the AUC was like R$278 billion, it was R$247 billion last quarter. So imagine there’s a market appreciation in there, so looking at the fixed income number. It was lower relative to last quarter, so just to sort to see how those inflows are evolving by segment now?

Okay. I got it. Yeah, I would have to get what was exactly the market appreciation of equities, quarter-over-quarter. I think, I can get back – we can get back to you later. But at the end of the day, we’re not opening anymore adjusted anything like adjusted client assets or anything like that. So, as we segregated corporate from retail, in our view, it doesn’t make sense, because corporate by nature has a different kind of volatility compared to retail. But, of course, we can have some unusual movements in one single quarter, whenever we have something like that. We are going to explain in our earnings release. Okay.

Okay. Thanks, Bruno, and thanks again for the additional disclosure.

Thank you, Tito. Next is Geoffrey from Autonomous. Hey, Geoff, good evening.

Hi. Can you hear me okay?

Hi, Geoff.

Hi. Can you hear me?

Yeah.

Great. Thank you for taking the question. And thanks for the new disclosure. There’s been some articles recently talking about IFAs moving away from XP. I wondered if you could elaborate on why you think some of those IFA moves have happened. And can you confirm are these IFAs where you had the long-term exclusivity and in place, and they decided to pay a break fee to go somewhere else?

Yeah, look, Geoff, it’s a competition. So a competitor comes, pays. The IFA decides to go or we do not think it’s worth retaining the IFA, whatever the case is. Then it happens. It’s natural. It’s not the first. And it’s not going to be the last time that it happens. Okay. Remember that we have more than 13,000 IFA – we have close to 12,000. We have more than 13,000 advisors in total. But we have close to 12,000 IFAs in our network. We have approximately, if you look only at the IFA world 70% roughly speaking market share. So it’s something natural, okay, we look at it as a natural thing that will happen again. And it has happened in the past. Yes, the IFAs that you referred to, they have long-term contracts. You also – I mean, you can in this quarter, we had if you go in our financials, you’re going to be able to see the disclosure of revenue, where we have revenue from incentives from B3 [indiscernible] and others. Part of that revenue when we get back, the fine that we have in the contracts, it goes in there. So this quarter, if I’m not mistaken, the total amount of that line was close to R$40 million. And part of it was helped by one IFA, and we might have that going forward as well. So we got that revenue and get the cash back. And that’s it.

When they decide to leave, do they tell you that’s purely a financial consideration for them? Or are the elements of your competitors’ offerings that they’re choosing? Because they think the competitor offers something that XP doesn’t?

Money.

Got it. Thanks very much.

Thank you, Geoff.

Thank you, Geoff. Have a good one.

Thank you.

Next Thiago from UBS. Good evening, Thiago. How are you?

Yes. Are you guys hear me?

Yeah.

Yeah, Thiago, How are you?

Okay. Thanks for the new disclosure, very good. You did in the new format. I have one question about the excess cash that you mentioned in the press release. You mentioned R$5 billion. I wanted to make sure if I understood the concept of this excess cash. So in the case of no real event position, or M&A, do XP will be able to distribute these R$5 billion highs in the coming years? Or part of this R$5 billion should be use it in your organic expansion. So with CapEx, with IT investments, so only to make sure if this R$5 billion should be distributed in the near future, if you don’t have any bigger monies?

Look, the R$5 billion in the near future. I don’t think so, in the future, yes. But in the near future, I don’t think so. Why is that? Number one, we are conservative. The way we approach our financials, and we always think about the long-term. Number two, we still have a lot of uncertainty upon us, I just talked about it. So, we think, it’s – we are here for the long-term, it’s wise to keep a higher, let’s say, margin of safety in moments like that. And what I can tell you, Thiago, is we keep generating cash, our company does generated a lot of cash on an annual basis. And, yes, we are going to keep evaluating the excess cash, because we are distributing. We think R$5 billion is enough for now to keep as access capital in our balance sheet. We can change our mind in the future and decide to work with less than that, or a little bit more, but for now, R$5 billion, seems more than enough. And the excess above the R$5 billion, yeah, we can keep distributing to shareholders. Remember that XP is a disrupter. We are in the financial industry, mostly in Brazil. And we have less than 2% of the financial industry revenue pool. So we are at a very early stage of the potential that the financial industry in Brazil offers as a disrupter. And the opportunities might arise. But, right now, where we are in our strategy, what we have done, I think that XP has already invested a lot our expense numbers they show it. So we have invested a lot in new verticals, we have put in place our digital account, we have cards, we have launched cards at Rico brands. We have our offshore account. We have our digital assets platform. We have the insurance business up and running and developments happening, as we speak. So we have done all those investments. Now, it’s time to consolidate the investments that we’ve done to increase the share of wallet of our existing clients. That’s part of the strategy why we decided to go beyond investments, and consolidate all of that and look for more efficiency in our company because, of course, we can be more efficient than we are right now. It’s natural in a company like XP that more than double its headcount base during the pandemic, since the pandemic to today, doing so many things together, that we now believe is the right time to put our energy into consolidating everything that we have invested in plus searching for more and more efficiency in our company. And then, if that is the strategy for the near-term, and we are concentrated in that, the additional excess capital above the R$5 billion, we start to distribute that we don’t need that right now. We don’t want to also to keep distributing capital. And then remember that we have less than 2% of the revenue one year later, we think now we want to do these or that, so we go back to shareholders and do a follow on every 6 months. That’s not what we want to do. So we are conservative the way we make these decisions. But when we do it, we go forward.

Very clear, Bruno. Thanks.

Thank you, Thiago.

Next question from Morgan Stanley. Hi, how are you?

Hi, Bruno, Andre, how are you?

Hi, Jorge.

Congrats on the numbers. And, again, I know it’s been said before, but really, thank you very much for the additional disclosure, I think, it’s going to go a long way in helping the market understand that your business, so thanks for that. My question is carrying around what you’ve been discussing, Bruno, so sorry for that. But when you think about your retail business, is it you think the direction of interest rates that would potentially improve the inflows, or is it actually the level of interest rates? And I’m thinking, obviously, on the Equities business, which is a big part of the revenues. And I’m saying this, because, we’ve – hopefully, we’ve seen the pick-up rates, right? I mean, the Central Bank has been on pause now, and the next move hopefully is now. So the fact that rates are going to start to come down, do you think that’s the trigger? Or is the trigger actually the absolute level of rates? And what do you think that absolute level is for us to get – for you to get more inflows into the Equities business?

Yeah, I think, it’s more of the direction than the level. But remember, what I just mentioned a few minutes ago, retail investors, they look to nominal terms. So, if interest rate is still going down, but the long-term rates are lower than the spot rate, that’s a headwind, because you need to convince me to explain, why is it? What is the premium embedded? What is the expectation of futures rates, and so on? We do that. Of course, we do. But it’s a headwind, I would say. But at the end of the day, it’s more about the direction in my view, but we need to take out part of the uncertainty. And then when we take out parts of the uncertainty, equity market should react first, I guess, as usually, and investors will fall, it’s the cycle that we’ve had in the past. For ourselves, the best – I would say the best. The sweet spot is when you have boom market start forming, but level of interest rates are still high. For XP, the interest rate is 2%. It’s not the best scenario, honestly. Would be in the middle range, I don’t know 6% to 8%, something like that, when you have a more stable environment with higher level of interest rates, but stable. That’s a good environment, a very good environment. But we navigate in all kinds of scenarios. We have been watching this, the mix gets worse. But we keep growing and we grow at a slower pace. That’s what it’s happening exactly in 2022. But the business is resilient, no matter what the macro environment is.

Great, Bruno, thank you. And I have a second question. And can you remind those what is the level of asset attrition a year later, when you lose a IFA, I remember, maybe like a year ago or so you published a press release with some of the actual numbers of specific IFAs that you lost in the past and the numbers were very, very small. Has that change – and then, can you remind us what the level is today? And what policy compared to IFAs you lost 3, 4 years ago?

Yeah, sure. Now the 70% to 80% of the client asset stays within XP. It doesn’t migrate. What we lose is basically the growth of that IFA office. If it was a good IFA office, we lose. If it was not a very good IFA office, I mean, we don’t use much. At the end of the day that’s basically it. Because when the IFA migrates, the clients’ hours, the client has XP account, has XP app everything, and then we have more than 13 advisors in our ecosystem that would be more than willing to serve that client, and that’s what happens.

Great. Thank you. Thanks. And thanks again for the vision of disclosure.

Sure.

Next, Mario from Bank of America.

Hi, Andre. Hi, Bruno. Thank you for taking my question. Also, we really appreciate the improved disclosure. My question is related to what Jorge just asked you, right. Last year, are you published this report saying that 80% of the AUC of the IFAs were left stayed with you. So when we see the slowdown in your net new money, are you able to break down for us? How much is like lower inflows and how much is like due to higher outflows? Can you just give us a dynamics right that you sing between inflows and outflows? And then my second question is related to your buyback, right. So you’re increasing a buyback program by R$1 billion on your presentation, you showed that you only executed half of your previous buyback. So I’m assuming is to have R$1.5 billion left to be bought back. But I wanted to understand the decision between buybacks and dividends. Why are you doing everything in buybacks and not in the form of dividends?

Okay, Mario. Your first question, it hasn’t changed, it’s not the slower pace of net client assets, it’s not because of migration of IFAs. Of course, there is a component, but it’s a small, okay, it’s a small. So it’s basically the macro environment posing a headwind in terms of bringing more money into the platform. We’re still bringing, but not with the size or amount that we would like to and think we can do it. So it’s not related to IFA leaving the platform. Your second question about buyback, you’re right, in what you said it’s approximately R$1.5 billion, considering the additional R$1 billion we announced today that we have to buy back shares until May next year. In the reason we decided for buyback is basically, because we think it’s a more attractive option nowadays. That’s basically the reason. But it can be dividends, but its audited buyback shares.

And, Bruno, any updates on the Itaú and Itaúsa decision to continue to sell down their stacks. Are you talking to them? Could you use your buyback then to negotiate directly with them?

No news about that. We – Itaú and Itaúsa, they have our direct contact for sure. They know we are here to help them to sell whatever they want. We have said that. But as far as, I know, it’s not in their intention. So I don’t know you would have trust me, Mario.

Okay, thank you.

Thank you, Mario.

Marcelo Telles from Credit Suisse. Hi, Telles. Good evening.

Hi Andre. Hi, Bruno. Thanks for the time and started to be sound like a broken record here, but I’m very happy to see the disclosure. You guys did so great initiative. I think there’s definitely help people understand that the story, so well done. I have a couple of questions, actually three questions. The first one, with regards to investment in IFAs, as you mentioned, in your presentation, right, you had about R$4.2 billion of invest investments in a plus some M&A, as well. And, I remember, I think until recently, I think kind of like a softer guidance for investments in IFAs, on a yearly basis would be – to be something similar to the amortization, right, of the investments in IFA. So, which I thought I think was about R$400 million a year. So how should we think about that going forward? I mean, is that still a reasonable assumption. So that’s my first question. The second question is more of a housekeeping item. I was looking at your adjusted gross cash flow. And for the second quarter is a bit different versus the number that you guys published, I think there’s almost like a R$600 million difference. So I just want to understand, what was the changer, I think, you guys had about R$9.8 billion in gross cash flow, and I think now is around like R$9.2 billion, so understand the difference? And my last question is more of a strategic question, thinking of your business, going forward, of course, very successful in investment platform, you’ve been adding new businesses to your core business, cards, the bank, and so on. When you think of your business today, including this new products. What are the areas that you think you are not in yet that you’d like to be? I don’t know, I’m thinking – acquiring maybe more like a digital bank. So how should we think about your business, 5 years down the road? Would still look different – very different from what we’re having today with this new product, or maybe more of the same? Thank you.

Thank you, Telles. Regarding your first question about IFA amount of annual investment, it’s hard to tell you mentioned about a soft guidance, probably, when we get that kind of question, we answer a number, I don’t know if we should. But at the end of the day, it depends, because we analyze case by case that’s how we do it. And, as I mentioned, in terms of the capital allocated in the IFA distribution network, we analyzed all the deals that we have done using several different metrics, using the data that we have for so many years with those IFAs, considering payback, return on equity, and so on. So it’s hard to tell how much is going to be. What I can tell you is, we do have part of our long-term contracts with our IFA distribution network. There is a component that is upon certain performance. Okay. So that part of the investments if the IFA reached the performance that we have established in contract then we have to pay X million additional. And when we do that, because it’s embedded into the same contract, it goes into that line, the prepaid expense. So that’s one part of the explanation. And we keep doing, our network keeps growing. You can see by our number of IFAs and so on, and we keep doing some incentives and contracts with our IFAs, when we think it’s a good opportunity. It’s a win-win situation for XP and the IFA, of course. This year, we probably are around putting out together R$500 million greater than the R$400 million. If you look at the prepaid expense, it has increased a little bit this year, but it’s not relevant, if you want to download. So I don’t have a specific number to tell you it could be higher than what you mentioned the soft guidance of the R$400 million. But it’s not going to be anything close to the amount that we have disbursed in the past as I said. Your second question about the cash flow. You’re right. You remind me something I should have said, we included in our earnings release, we included the energy, for example, and compulsory in the asset part, energy, we have – there we go. Thank you. Yeah. So energy, that’s probably what you’re talking about, Telles, the R$619 million in the third quarter, and R$540 million in the second quarter. In the second quarter, we had the liability part. But we didn’t have the asset part of the energy, because the way the accounting recognizing, it’s a credit business, prepaid average [ph] for corporate clients, that we have this business here. But the accounting measure goes into a line that is not considering our financial assets, but at the end of the day it is. So that’s the adjustment that we have made there. And the other adjustment that we have made is the commitment subject to possible redemption that you can see in the liability part, there is a reduction is about the spec that we have in our balance sheet from our asset management arm. And, as you know, spec stays in secured bills [ph], which is a financial assets, so it goes into the asset line and the liability is not a financial asset. So it was not included, and we included there. So those are the main adjustments that we have made. And your third question about this strategy, what we can think about XP 5 years from now. Look, we are now focused on consolidating all the investments we have done, I think that’s the wise thing to do. First, because we believe the strategy of those investments, they are in the right track. And we believe we can really benefit from those investments in – all of the investments that are at very early stage. So we need to focus there and put traction on that. And that’s going to take a while it’s not going to happen in 1 quarter, 2 quarters, not even in 1-year. So that’s where I believe most of our energy is going to be besides, of course, the efficiency part that I also talked about. 5 years from now is hard. We have many ideas here in XP. We are a bunch of entrepreneurs that don’t believe anything is impossible. That’s one of our core values. So we have many managers, if you had asked me the same question 5 years ago, I would get totally wrong. I would not say that we would have the businesses that we have right now in the way the company would be. So it’s hard to tell. We’d like to go step by step. That’s how we got here. We like to keep our profitability. We are not satisfied with our margins. We understand our margins, they are a consequence of decisions we have made that we believe they are in the right track, as I said, and they have a clear strategy back in them. But we always think we could have been doing better. That’s how we are. We’d like profitability. We like to go step-by-step. We’d like to feel that we can move to the next step. But we think of many ideas and we have a very small part of the financial industry. But I don’t have – we’re going to go into acquiring business as you mentioned, no, I don’t have occlude to give you as of today, Marcelo.

No, Bruno. That’s very clear. Thank you so much. If allow me just to follow-up on one of the previous questions from the other analysts. I think regarding the, I think, Thiago asks that question about the R$5 billion excess capital that you mentioned your earliest release, which, by the way, thanks for putting that there, I think that’s very helpful indeed. That this R$5 billion does that include the amount of money to have, let’s say, to do warehousing, or to participate like in a syndicate? How should we think about that? Or this is, in addition, to what you already have, let’s say allocated, let’s call it your, let’s say, minimum operating cash, right?

Yeah. No, it doesn’t mean, you need separate capital from cash, the way we use to get the R$5 billion, we use metrics to adjust all our assets, beyond the prudential conglomerates for the whole group. Okay, that’s what we do here. And we adjust our assets by risk, and compare that with our available capital, also for the whole group. And we use our internal tariff that is pretty much similar to what we have in our prudential conglomerates, that’s how we get to the excess capital, that we have cash. Cash is not an issue for us in the sense that we are – we have NAV, net asset value, we could leverage our balance sheets, if we wanted to, but that’s a different discussion. So I would answer your question, yes, everything is taken into account to consider the R$5 billion, but just bear in mind that cash and excess capital, they are not the same thing, because in a financial institution like ourselves, those things they get confused sometimes. This one of the reasons that I talked about the cash flow from operations, for example, that we have to disclose from the accounting perspective, it’s tricky, you cannot look at a company like XP. Cash flow from operation operations, your operations are not making or generating cash flow in this quarter, that quarter, it doesn’t make any sense to make this analysis, because, for example, if we take a financial assets, that is that we have bought in our assets, liability part, for example, like a government bonds, there is longer than 90 days, and we just decide to sell and invest in something shorter-term like 60 days, it will not be there anymore in this cash flow account, because it will go directly into cash and the equivalent it doesn’t change anything. The same thing with – if you go there, there is a financial instruments payable, basically the banking business CDs that we issue, et cetera. If we have other financial or we are issuing CDs there, it’s going to be a financing part of our – it’s going to be in our cash from operations. The increase of that source of funding, because at the end of the day is a financing. What matters is what you do with that money. If we buy short-term, again, maturity securities, it’s going to be in the cash and equivalent. So at the end of the day, you’re going to look at the cash flow from operations, you’re going to say, oh, your cash flow from operation is increasing. It’s not, because we had a financing part that we are investing in cash and equivalents. So we’re working on the better managerial cash flow that makes sense, the one that we present this accounting reason, but it’s tricky to look at it, and get to any conclusion. So capital in cash is tricky, but yeah, I give a long answer, but R$5 billion take everything into account.

Thanks a lot, Bruno and Andre.

Thank you, Telles.

Thank you, Telles. Nice to hear from you. Okay, that was the last question. Thank you all for sticking with us. It’s a busy earning season, right, Bruno? Everyone is looking at the results. So…

You guys are busy, I know.

Yeah, everyone’s busy. So we will be happy to connect with you guys over the next few weeks to discuss the results and anything you might have interest that I don’t know, Bruno, if you want to say…

Hello, everybody, thank you all. And probably you’re going to have doubts, and I mean, we released a lot of new numbers, so count on us to help you understand anything you need. So thank you very much.

Thank you, all. Have a great night.

Have a great night. Bye-bye