XP Stock: From $38.43 To $44.19 (14.99% Increase) Intraday Explanation

By Amit Chowdhry ● May 5, 2021
  • The stock price of XP Inc (NASDAQ: XP) increased from $38.43 to $44.19 (up 14.99%) during intraday trading. This is why it happened.

The stock price of XP Inc (NASDAQ: XP) increased from $38.43 to $44.19 (up 14.99%) – a leading tech-enabled platform and a trusted pioneer in providing low-fee financial products and services in Brazil – during intraday trading. Investors are responding positively to the company’s first quarter 2021 financial results.

These are the highlights:

— Total Gross Revenue hit an all-time high, increasing 50% from R$1.9 billion in Q1 20 to R$2.8 billion in Q1 21, despite a lower contribution from performance fees. The increase was mainly driven by strong growth in the Retail business, which contributed 90% of the growth year-over-year.

Q1 20 vs Q1 21:

— Retail revenue grew 67% from R$1.3 billion in Q120 to R$2.1 billion in Q121. And revenue generation was strong across all products and channels within Retail, as resilient secondary trading volumes in securities, solid primary market activity, increases in structured operations distribution and growing management fees more than offset the reduced fees for online stock trading put into place in September 2020.

— In Q121, Retail-related revenues represented 79% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement, and were composed of Derivatives with Retail Clients, Fixed Income secondary transactions, and Floating, among others.

— Adjusted EBITDA grew 75%, from R$595 million to R$1,043 million and margins expanded from 34.3% to 39.7%. The growth was driven by (1) increases in the top line, mainly coming from Retail; (2) better COGS as a percentage of Net Revenues, and consequently higher gross margins and (3) operating leverage in SG&A. Despite investments in technology, product development, and new hires — headcount increased by 64% during the last 12 months – the margin expansion was attributable to our highly scalable business model.

— Adjusted Net Income grew 104%, from R$415 million in Q1 20 to R$846 million in Q1 21. Year-over-year growth was driven by (1) strong performance for the Retail business; (2) cost efficiencies and operating leverage and (3) a lower effective tax rate. Our effective tax rate decreased from 23.0% in the Q1 20 to 6.4% in Q1 21, mainly due to our post-IPO corporate structure. Our Adjusted Net Margin expanded by 827 bps to 32.2% in Q1 21.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.