XP Q3 Earnings Highlight Strategic Scaling and Investor Value Creation

Operational Efficiency: A Pillar of Sustainable Growth

XP's ability to scale efficiently is evident in its cost management and productivity metrics. Total SG&A expenses in Q3 2025 reached R$1.7 billion, reflecting a 7% sequential increase but a 10% YoY improvement in the LTM efficiency ratio, which now stands at 34.7%. This metric, a key indicator of operational health, highlights XP's success in aligning cost growth with revenue expansion. Additionally, the LTM compensation ratio improved to 23.5%, signaling better alignment between employee costs and output.

The company's focus on technology-driven solutions has further amplified efficiency. By automating client onboarding and leveraging AI for personalized financial advice, XP has reduced per-customer acquisition costs while boosting net new money inflows. Retail net new money rebounded to BRL 20 billion in Q3, a 13% YoY increase, driven by enhanced digital engagement.

Capital Allocation: Prioritizing Shareholder Returns

XP's capital allocation strategy in Q3 2025 further solidified its reputation as a disciplined investor. The company repurchased BRL 2 billion in shares during the year, with BRL 850 million executed post-Q3, and announced a new BRL 1 billion buyback program alongside a BRL 500 million dividend payout. These actions reflect a 50–70% payout ratio, aligning with management's commitment to distributing excess capital to shareholders.

Such strategies are not merely reactive but strategically designed to enhance long-term value. By maintaining a robust capital ratio of 21.2%-an 180-basis-point increase quarter-over-quarter-XP has ensured flexibility to reinvest in high-growth segments like private banking and corporate finance while rewarding investors.

Strategic Initiatives: Targeting High-Growth Segments

XP's focus on high-income and private banking segments has proven pivotal. Q3 saw BRL 9 billion in corporate net new money, driven by tailored solutions for SMEs and institutional clients. This diversification mitigates reliance on retail volatility and taps into Brazil's underpenetrated corporate financial services market.

Moreover, XP's investment in AI-powered client service platforms has enhanced customer retention and cross-selling. For instance, its digital wealth management tools now serve over 2 million active users, contributing to a 15% YoY increase in average assets under management.

Conclusion: A Model for Sustainable Value Creation

XP's Q3 2025 results exemplify a rare combination of top-line growth, operational efficiency, and strategic capital allocation. By maintaining a 23% ROE while expanding into high-margin segments, the company has positioned itself to deliver consistent returns. For investors, the share buybacks and dividends signal confidence in future cash flows, while the 9% revenue growth and 13% EPS increase validate its scalable business model.

As XP continues to leverage technology and refine its capital deployment, it stands as a benchmark for fintech firms aiming to balance innovation with profitability.