XP Inc. posted quarterly profit that exceeded analyst estimates, though its shares declined as investors focused on narrowing margins and intensifying competition in Brazil’s brokerage sector.
The São Paulo-based financial services firm reported earnings per share of 1.25 reais, topping the 1.10-reais consensus estimate compiled by Refinitiv. Revenue rose 15% year-over-year to 3.8 billion reais, driven by growth in its core brokerage and asset management divisions.
Despite the beat, XP’s stock fell 3.2% in after-hours trading as analysts highlighted concerns over margin compression. Operating margins declined to 48% from 52% in the same period last year, reflecting higher customer acquisition costs and pricing pressure amid a crowded market for digital brokerage services in Brazil.
Chief Executive Officer Guilherme Benchimol attributed the results to strong client activity, noting that the company added 1.1 million new customers in the quarter. However, he acknowledged that competitive dynamics were weighing on profitability, particularly in the brokerage segment.
The company maintained its full-year guidance, reaffirming revenue growth of 12-15% and margin targets of 45-47%, though some analysts questioned the feasibility given current trends. XP’s shares have underperformed the broader Brazilian market index this year, down 8% versus a 5% gain for the Bovespa.
Investor focus remains on the sustainability of margins as XP expands into wealth management and insurance products to diversify revenue streams.
