Group 1: Earnings Performance - XP Inc.A reported quarterly earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.38 per share, and up from $0.37 per share a year ago, representing an earnings surprise of 2.63% [1] - The company posted revenues of $740.99 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.55%, and down from $818.21 million year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates just once, while it has topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - XP Inc.A shares have increased approximately 57.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.4% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.39 on revenues of $803.44 million, and for the current fiscal year, it is $1.60 on revenues of $3.25 billion [7] Group 3: Industry Context - The Zacks Industry Rank for Financial - Miscellaneous Services, to which XP Inc.A belongs, is currently in the bottom 45% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Group 1 - Rosen Law Firm is investigating potential securities claims on behalf of shareholders of XP Inc. due to allegations of misleading business information [1] - Investors who purchased XP securities may be entitled to compensation through a class action without any out-of-pocket fees [2] - A report by Grizzly Research accused XP of operating a Ponzi scheme, leading to a 5.4% drop in XP's stock on March 12, 2025 [3] Group 2 - Rosen Law Firm emphasizes the importance of selecting qualified legal counsel with a successful track record in securities class actions [4] - The firm has achieved significant settlements for investors, including over $438 million in 2019 and has been consistently ranked among the top firms in securities class action settlements [4]

Core Viewpoint - Pomerantz LLP is investigating claims of potential securities fraud and unlawful business practices involving XP Inc. and its officers or directors [1] Group 1: Investigation and Allegations - Pomerantz LLP is representing investors of XP Inc. in an investigation regarding possible securities fraud [1] - Grizzly Research published a report alleging that XP is operating a Ponzi scheme through derivatives sales misrepresented as proprietary trading profits [3] - Following the report's release, XP's stock price dropped by $0.82, or 5.48%, closing at $14.14 per share on March 12, 2025 [3] Group 2: Company Background - Pomerantz LLP is recognized as a leading firm in corporate, securities, and antitrust class litigation, with a history of over 85 years in fighting for victims of securities fraud [4] - The firm has successfully recovered numerous multimillion-dollar damages awards for class members [4]

Core Viewpoint - The article emphasizes the importance of value investing and highlights XP (XP) as a strong candidate for value investors due to its favorable valuation metrics and strong earnings outlook [2][8]. Valuation Metrics - XP has a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating it is highly regarded in the market [4]. - The stock's P/E ratio is 9.22, significantly lower than the industry average of 15.41, suggesting it may be undervalued [4]. - XP's PEG ratio stands at 0.65, compared to the industry average of 0.97, indicating a favorable valuation when considering expected earnings growth [5]. - The P/B ratio for XP is 2.30, which is lower than the industry average of 3.19, further supporting the notion of undervaluation [6]. - XP's P/CF ratio is 9.44, well below the industry average of 14.76, highlighting its attractive cash flow position [7]. Historical Performance - Over the past 52 weeks, XP's Forward P/E has fluctuated between 1.97 and 12.21, with a median of 9.50, indicating volatility but also potential for growth [4]. - The PEG ratio for XP has ranged from 0.16 to 0.85, with a median of 0.71, reflecting its earnings growth potential [5]. - The P/B ratio has varied between 1.63 and 2.99, with a median of 2.40, showing stability in its book value relative to market value [6]. - The P/CF ratio has seen a range from 6.71 to 14.03, with a median of 10.36, indicating a solid cash flow outlook [7]. Investment Outlook - Given the combination of XP's low valuation metrics and strong earnings outlook, it is positioned as a compelling value stock for investors [8].

Core Viewpoint - Pomerantz LLP is investigating claims of potential securities fraud or unlawful business practices involving XP Inc. and its officers or directors [1] Group 1: Investigation and Allegations - Pomerantz LLP is representing investors of XP Inc. in an investigation regarding possible securities fraud [1] - Grizzly Research published a report alleging that XP is operating a Ponzi scheme through derivatives sales misrepresented as proprietary trading profits [3] - Following the report's release, XP's stock price decreased by $0.82, or 5.48%, closing at $14.14 per share on March 12, 2025 [3] Group 2: Company Background - Pomerantz LLP is recognized as a leading firm in corporate, securities, and antitrust class litigation, with a history of recovering significant damages for victims of securities fraud [4]

[Presentation of Financial and Other Information](index=8&type=section&id=Presentation%20of%20Financial%20and%20Other%20Information) [Financial Statements and Reporting Currency](index=8&type=section&id=Financial%20Statements%20and%20Reporting%20Currency) The company's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, with the Brazilian real (R$) as the presentation and functional currency - The company maintains its books and records in Brazilian reais (R$), which is the presentation and functional currency for its main operations[18](index=18&type=chunk) - Financial statements are prepared in accordance with IFRS as issued by the IASB[18](index=18&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) The report includes the non-GAAP financial measure 'Adjusted Net Income', which for 2024 excludes non-recurring or non-cash items to better reflect core operating performance - The company presents Adjusted Net Income, which for 2024 excludes non-recurring/non-cash items like charges and tax assets from expired PSUs to better reflect core operating performance[25](index=25&type=chunk) - For the year ended December 31, 2023, Adjusted Net Income was the same as Net Income as no such adjustments were made[25](index=25&type=chunk) [PART I](index=14&type=section&id=PART%20I) [ITEM 3. KEY INFORMATION](index=14&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section details the company's primary risks, encompassing intense industry competition, cybersecurity threats, Brazilian macroeconomic instability, and share-related issues like the dual-class voting structure [Risk Factors](index=14&type=section&id=D.%20Risk%20Factors) The company faces significant risks from intense industry competition, cybersecurity threats, Brazilian macroeconomic instability, and its dual-class share structure concentrating voting power - **Business and Industry Risks:** Key risks include intense competition from traditional and non-traditional financial services providers, the need for constant investment in technology to keep pace with industry changes, potential client attrition, and reliance on the B3 exchange[47](index=47&type=chunk)[54](index=54&type=chunk)[63](index=63&type=chunk) - **Cybersecurity Risks:** The company is exposed to cybersecurity breaches and computer viruses which could lead to liability, litigation, and reputational damage. A recent incident involved unauthorized access to a company database hosted by a third-party vendor[71](index=71&type=chunk)[73](index=73&type=chunk) - **Brazil-Related Risks:** Significant influence of the Brazilian federal government over the economy, political and economic instability, high inflation, and exchange rate volatility could harm the company's business and share price[48](index=48&type=chunk)[179](index=179&type=chunk)[182](index=182&type=chunk) - **Share-Related Risks:** The dual-class share structure concentrates voting control with XP Control, limiting other shareholders' influence. As a Cayman Islands company, shareholder rights differ from those under U.S. laws. The company's status as a foreign private issuer results in different disclosure requirements[49](index=49&type=chunk)[208](index=208&type=chunk)[223](index=223&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=71&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details XP Inc.'s history, business model, market environment, and organizational structure as a leading technology-driven financial platform in Brazil [History and Development of the Company](index=71&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) XP Inc. was incorporated in 2019, completed its IPO, and has since expanded through mergers, acquisitions, and significant corporate governance enhancements - The company completed its Initial Public Offering on December 13, 2019[243](index=243&type=chunk) - In 2021, XP consummated a merger with XPart, a company created from the segregation of Itaú Unibanco Holding's investment in XP[246](index=246&type=chunk) - The acquisition of Banco Modal S.A. was completed on July 1, 2023, in exchange for **18.7 million XP BDRs**[267](index=267&type=chunk) - In 2024, the company implemented significant corporate governance enhancements, including creating a majority-independent board and two new board committees[250](index=250&type=chunk)[254](index=254&type=chunk) [Business Overview](index=79&type=section&id=B.%20Business%20Overview) XP Inc. operates as a technology-driven financial services platform in Brazil, leveraging an omni-channel distribution network and diversified product offerings to disrupt traditional banking Key Performance Indicators (as of Dec 31, 2024) | Metric | Value | | :--- | :--- | | Client Assets | R$1.2 trillion | | Active Clients | 4.7 million | | Independent Financial Advisors (IFAs) | ~14,000 | | Net Promoter Score (NPS) | 70 | - The company operates an omni-channel distribution network including XP Direct, Rico, Clear, and a network of approximately **14,000 IFAs** across Brazil[288](index=288&type=chunk)[341](index=341&type=chunk) - XP's business model is asset-light and scalable, with new business lines (credit cards, digital accounts, etc.) representing close to **21.6% of total revenues** in 2024, making the business less cyclical[295](index=295&type=chunk)[296](index=296&type=chunk) - The company's growth strategy is based on four pillars: Leadership in Investments, Retail cross-sell, Corporate & SMB, and a foundational quality initiative[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) [Organizational Structure](index=109&type=section&id=C.%20Organizational%20Structure) XP Inc. is a Cayman Islands holding company operating through 42 subsidiaries across Brazil, USA, and UK, covering diverse financial services - As of December 31, 2024, the group is composed of XP Inc. and **42 subsidiaries**, with **36 incorporated in Brazil** and **8 in other countries**[251](index=251&type=chunk) - The report provides a detailed list of subsidiaries, joint ventures, and associated companies, along with their principal activities and the company's ownership interest for 2024, 2023, and 2022[506](index=506&type=chunk) [Property, Plants and Equipment](index=111&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company's intellectual property includes trademarks but no patents, with principal offices leased in São Paulo and data centers outsourced in Brazil - The company owns valuable trademarks such as XP, XP Investimentos, Rico, Clear, and Infomoney, but does not own any patents[509](index=509&type=chunk) - Principal executive offices are located in São Paulo, Brazil, under a lease agreement expiring in December 2027[510](index=510&type=chunk) - The company uses a third-party data center service provider with facilities in Barueri and Santana do Parnaíba, São Paulo[511](index=511&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=112&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes XP's financial performance, highlighting **15% revenue growth** to **R$17.0 billion** and **16% net income increase** to **R$4.5 billion** in 2024, alongside liquidity and macroeconomic influences [Operating Results](index=112&type=section&id=A.%20Operating%20Results) XP Inc. reported **15% revenue growth** to **R$17.0 billion** and **16% net income increase** to **R$4.5 billion** in 2024, driven by strong Retail and Corporate & Issuer Services performance Financial Performance (2024 vs. 2023) | Metric | 2024 (R$ millions) | 2023 (R$ millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue and Income | 17,031 | 14,860 | 15% | | Income Before Income Tax | 4,986 | 3,936 | 27% | | Net Income | 4,515 | 3,899 | 16% | | Adjusted Net Income | 4,544 | 3,899 | 17% | - Retail revenue increased by **14% to R$13.5 billion** in 2024, driven by growth in client base and assets, and strong performance in fixed income and credit cards[528](index=528&type=chunk) - Corporate & Issuer Services revenue grew **45% to R$2.3 billion** in 2024, mainly due to strong performance in Debt Capital Markets (DCM) and higher M&A advisory fees[530](index=530&type=chunk) - Institutional revenue decreased by **9% to R$1.4 billion** in 2024, attributed to lower trading activity[529](index=529&type=chunk) [Liquidity and Capital Resources](index=122&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) As of December 31, 2024, XP Inc. maintained **R$12.9 billion** in cash, with net cash from operations increasing to **R$11.2 billion**, and total indebtedness including **R$9.4 billion** in loans, debentures, and senior notes Cash Flow Summary (in R$ millions) | Cash Flow | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from operating activities | 11,179 | 8,127 | | Net cash from (used in) investing activities | (1,667) | 539 | | Net cash from (used in) financing activities | (5,784) | (4,395) | - As of December 31, 2024, the company had **R$12.9 billion** in cash and cash equivalents[611](index=611&type=chunk) - Total indebtedness as of December 31, 2024, included **R$1.7 billion** in loans, **R$1.9 billion** in debentures, and **R$5.8 billion** in senior notes[618](index=618&type=chunk) - Capital expenditures in 2024 amounted to **R$330 million**, representing **1.9% of total net revenue and income**[633](index=633&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=124&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details XP Inc.'s leadership, compensation, and employee base, highlighting its nine-member board with a majority of independent directors and **7,442 employees** as of year-end 2024 [Directors and Senior Management](index=124&type=section&id=A.%20Directors%20and%20Senior%20Management) As of December 31, 2024, XP Inc.'s board comprises nine members, with five independent, chaired by Guilherme Benchimol, and Thiago Maffra as CEO - The board is composed of **nine directors**, with Guilherme Dias Fernandes Benchimol as Chairman[639](index=639&type=chunk)[641](index=641&type=chunk) - Key executive officers include Thiago Maffra (CEO), Victor Andreu Mansur Farinassi (CFO), and Fabrício Cunha de Almeida (General Counsel)[651](index=651&type=chunk)[652](index=652&type=chunk)[653](index=653&type=chunk) - The Shareholders' Agreement with key investors, including Itaú Unibanco, was terminated on July 6, 2023, strengthening corporate governance[656](index=656&type=chunk) [Compensation](index=132&type=section&id=B.%20Compensation) Aggregate compensation for directors and executive officers was **R$34 million** in 2024, with a Long-Term Incentive Plan (LTIP) authorizing up to **5% of outstanding common shares** for equity awards Aggregate Compensation of Directors and Executive Officers | Year | Compensation (R$ millions) | | :--- | :--- | | 2024 | 34 | | 2023 | 33 | | 2022 | 69 | - The company implemented a Long-Term Incentive Plan (LTIP) in December 2019, authorizing the issuance of up to **5% of its outstanding common shares** as equity awards[660](index=660&type=chunk) [Board Practices](index=132&type=section&id=C.%20Board%20Practices) As a foreign private issuer, XP Inc. follows Cayman Islands governance practices, maintaining an Audit Committee with independent directors and additional committees for compensation, risk, and strategy - The company leverages its foreign private issuer status to follow home country (Cayman Islands) practices instead of certain Nasdaq rules, such as the requirement for a compensation committee composed solely of independent directors[663](index=663&type=chunk)[666](index=666&type=chunk) - The Audit Committee consists of **three independent directors**: Jose Luiz Acar Pedro (Chair), Oscar Rodríguez Herrero, and João Roberto Gonçalves Teixeira[665](index=665&type=chunk) - The board has established three other committees: Compensation, People, Nominating and Governance; Risks, Credit and ESG; and Strategy and Performance[670](index=670&type=chunk)[671](index=671&type=chunk)[672](index=672&type=chunk) [Employees](index=134&type=section&id=D.%20Employees) As of December 31, 2024, XP Inc. employed **7,442 people**, primarily in Sales and Marketing (**55%**) and Technology (**18%**), across offices in Brazil and the US Employee Headcount by Function (as of Dec 31, 2024) | Function | Number of employees | % of Total | | :--- | :--- | :--- | | Management | 50 | 1% | | Technology | 1,372 | 18% | | Sales and Marketing | 4,113 | 55% | | Customer Support | 336 | 5% | | General and Administrative | 1,571 | 21% | | **Total** | **7,442** | **100%** | [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=134&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details XP Inc.'s ownership structure, where XP Control LLC holds **70.43% of voting power**, and outlines its policy for related party transactions following the termination of the Itaú Unibanco shareholder agreement [Major Shareholders](index=134&type=section&id=A.%20Major%20Shareholders) As of April 15, 2025, XP Control LLC holds **100% of Class B shares**, representing **70.43% of total voting power**, with other major institutional investors holding significant Class A stakes Major Shareholders as of April 15, 2025 | Shareholder | Class A Shares (%) | Class B Shares (%) | Total Voting Power (%) | | :--- | :--- | :--- | :--- | | XP Control LLC | — | 100.00% | 70.43% | | Dodge & Cox | 9.94% | — | 2.94% | | Mawer Investment Management Ltd. | 8.45% | — | 2.50% | | Capital World Investors | 7.05% | — | 2.09% | | General Atlantic (XP) Bermuda, L.P. | 6.82% | — | 2.02% | | Blackrock, Inc. | 6.65% | — | 2.98% | [Related Party Transactions](index=136&type=section&id=B.%20Related%20Party%20Transactions) The company conducts ordinary course related party transactions, now excluding Itaú Unibanco after their shareholder agreement termination, with all such dealings requiring audit committee ratification - The shareholder agreement with Itaú Unibanco was terminated on July 10, 2023, and as a result, Itaú Unibanco is no longer considered a related party[686](index=686&type=chunk) - The company has a related party transaction policy that requires ratification of such transactions by the audit committee[689](index=689&type=chunk) - XP entered into a Registration Rights Agreement with major shareholders, granting them rights to demand registration for public resale of their shares[690](index=690&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=137&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers XP Inc.'s dividend policy, including **US$350 million** paid in 2024, and legal proceedings, for which **R$146 million** in provisions were recorded as of December 31, 2024 [Consolidated Statements and Other Financial Information](index=137&type=section&id=A.%20Consolidated%20Statements%20and%20Other%20Financial%20Information) XP Inc. paid **US$350 million** in dividends in 2024 and provisioned **R$146 million** for probable legal losses, while facing **R$2.5 billion** in possible contingent liabilities - The company paid a cash dividend of **US$350.0 million** (approx. **US$0.65 per share**) on December 18, 2024[698](index=698&type=chunk) - As of December 31, 2024, the company recorded provisions of **R$146 million** for legal proceedings where loss is considered probable[702](index=702&type=chunk) Provisions for Legal Proceedings (as of Dec 31, 2024) | Contingency Type | Provision Amount (R$ million) | | :--- | :--- | | Civil | 59 | | Labor | 86 | | Tax | 1 | | **Total** | **146** | - The company has identified contingent liabilities with a 'possible' risk of loss amounting to **R$2.5 billion**, for which no provision has been recorded. These relate mainly to tax (**R$1.3 billion**), civil (**R$0.97 billion**), and labor (**R$0.17 billion**) matters[1320](index=1320&type=chunk)[1322](index=1322&type=chunk) [ITEM 9. THE OFFER AND LISTING](index=142&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) This section outlines XP Inc.'s securities listings, including Class A common shares on Nasdaq ('XP'), Brazilian Depositary Receipts on B3 ('XPBR31'), and senior notes on the Singapore and Luxembourg exchanges - Class A common shares are listed on the Nasdaq Global Select Market under the symbol 'XP'[723](index=723&type=chunk) - Brazilian Depositary Receipts (BDRs) trade on the B3 exchange under the symbol 'XPBR31'[724](index=724&type=chunk) - The company has two series of senior notes listed: **3.250% notes due 2026** on the Singapore Exchange and **6.750% notes due 2029** on the Luxembourg Stock Exchange[723](index=723&type=chunk)[724](index=724&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=143&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details XP Inc.'s corporate structure as a Cayman Islands exempted company, highlighting its dual-class share structure, anti-takeover provisions, and favorable tax implications [Memorandum and Articles of Association](index=143&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) The company's governance is defined by its dual-class share structure, granting Class B shares **ten votes per share** and including preemptive rights and anti-takeover provisions - The company has a dual-class share structure: Class A common shares (**1 vote per share**) and Class B common shares (**10 votes per share**)[730](index=730&type=chunk)[736](index=736&type=chunk) - Holders of Class B shares have preemptive rights to maintain their proportional ownership and voting interest in the event of new share issuances[740](index=740&type=chunk) - Anti-takeover provisions include the dual-class structure and the board's ability to issue preferred shares with special rights[781](index=781&type=chunk)[784](index=784&type=chunk) - As of December 31, 2024, the company had **434,047,695 Class A** and **103,375,726 Class B shares** issued and outstanding[681](index=681&type=chunk) [Taxation](index=154&type=section&id=E.%20Taxation) This subsection details tax considerations, noting XP Inc.'s tax-exempt status in the Cayman Islands with a **20-year concession**, and discusses potential Passive Foreign Investment Company (PFIC) implications for U.S. Holders - The Cayman Islands currently levy no taxes on corporate profits, income, gains, or appreciation, and there are no withholding taxes on dividends paid to shareholders[795](index=795&type=chunk) - The company has obtained a **20-year tax concession undertaking** from the Cayman Islands government, effective September 2, 2019[796](index=796&type=chunk) - For U.S. Holders, there is a risk that the company could be classified as a Passive Foreign Investment Company (PFIC), which would result in adverse U.S. federal income tax consequences. The company does not believe it was a PFIC for its 2024 taxable year[806](index=806&type=chunk) [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=156&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to various market risks, including interest rate, currency, price, liquidity, and credit risk, which are managed through sensitivity analysis, diversification, and derivatives - The company is exposed to market risks including interest rate, currency, price, liquidity, and credit risk[822](index=822&type=chunk) - Interest rate risk arises from floating rate indebtedness and cash equivalents indexed to the CDI rate[829](index=829&type=chunk) - Currency risk stems from investments in subsidiaries in the U.S. and U.K. The U.S. dollar exposure is hedged to minimize volatility[826](index=826&type=chunk) Market Risk Sensitivity Analysis (Scenario III - 50% shock, in R$ millions) | Risk Factor | 2024 Impact | 2023 Impact | 2022 Impact | | :--- | :--- | :--- | :--- | | Pre-fixed interest rate | 50 | 23 | (484) | | Foreign currencies | 148 | 907 | (121) | | Shares prices | (459) | (290) | (243) | | **Total Impact** | **(283)** | **438** | **(1,232)** | [PART II](index=158&type=section&id=PART%20II) [ITEM 15. CONTROLS AND PROCEDURES](index=158&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and internal control over financial reporting as of December 31, 2024, as assessed by management and attested by PwC - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[857](index=857&type=chunk) - Based on the COSO framework, management concluded that internal controls over financial reporting were effective as of December 31, 2024[860](index=860&type=chunk) - The independent registered public accounting firm, PwC, has issued an attestation report on the effectiveness of the company's internal control over financial reporting[861](index=861&type=chunk)[862](index=862&type=chunk) - No changes occurred during the period that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting[864](index=864&type=chunk) [Other Information](index=158&type=section&id=ITEM%2016.%20Other%20Information) This section covers governance, including audit committee expertise, code of ethics, **R$8.8 million** in accountant fees, **14 million shares** repurchased in 2024, and cybersecurity program details, including a recent remediated incident [Principal Accountant Fees and Services](index=158&type=section&id=ITEM%2016C.%20Principal%20Accountant%20Fees%20and%20Services) Fees billed by PwC totaled **R$8.77 million** in 2024 and **R$8.75 million** in 2023, primarily for audit services, all pre-approved by the audit committee Accountant Fees (in thousands of reais) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | 7,137 | 7,992 | | Audit-related fees | 509 | 760 | | Tax fees | — | — | | All other fees | 1,124 | — | | **Total** | **8,770** | **8,752** | [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=159&type=section&id=ITEM%2016E.%20Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) The company executed multiple share repurchase programs in 2024, buying back **13,977,674 common shares** at an average price of **US$18.37**, and approved a new **R$1.0 billion** program until November 2025 - The company repurchased a total of **13,977,674 common shares** during fiscal year 2024 at an average price of **US$18.37 per share**[878](index=878&type=chunk) - A new share repurchase program for up to **R$1.0 billion** was approved on November 19, 2024, and is effective until November 20, 2025[876](index=876&type=chunk) [Corporate Governance](index=160&type=section&id=ITEM%2016G.%20Corporate%20Governance) As a foreign private issuer, XP Inc. follows Cayman Islands governance, enhancing its board in 2024 with **four new independent directors** and establishing new committees to improve oversight and accountability - In 2024, the company appointed **four new independent directors**, resulting in a majority-independent board[922](index=922&type=chunk)[923](index=923&type=chunk) - Two new board committees were established: the Risks, Credit and ESG Committee and the Strategy and Performance Committee[926](index=926&type=chunk) - The company eliminated slate director elections, allowing shareholders to vote for directors on an individual basis to enhance accountability[916](index=916&type=chunk) - A compensation recoupment policy was adopted in November 2023 in compliance with SEC and NASDAQ regulations[928](index=928&type=chunk) [Cybersecurity](index=161&type=section&id=ITEM%2016K.%20Cybersecurity) XP Inc. manages cybersecurity risk through a program overseen by its Risks, Credit and ESG Committee, and successfully remediated a March 2025 third-party vendor data access incident without material impact - Cybersecurity risk management is overseen by the board's Risks, Credit and ESG Committee and directed by the Chief Technology Officer (CTO)[939](index=939&type=chunk)[940](index=940&type=chunk) - On March 22, 2025, an unauthorized third party accessed a client database hosted by a third-party vendor. The company contained the incident and remediated the vulnerability[937](index=937&type=chunk) - The cybersecurity incident did not compromise any client accounts, funds, or internal XP systems and has not had a material impact on the company's business or financial condition[937](index=937&type=chunk) [PART III](index=161&type=section&id=PART%20III) [Financial Statements](index=161&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents XP Inc.'s audited consolidated financial statements for 2022-2024, prepared under IFRS, with PwC confirming fair presentation and effective internal controls Consolidated Balance Sheet Highlights (in R$ thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **347,456,760** | **249,040,678** | | Cash | 5,610,548 | 3,943,307 | | Financial assets | 321,697,974 | 229,197,214 | | Goodwill and Intangible assets | 2,634,449 | 2,502,045 | | **Total Liabilities** | **327,409,523** | **229,589,834** | | Financial liabilities | 257,965,004 | 171,237,146 | | Retirement plans and insurance liabilities | 66,224,387 | 56,409,075 | | **Total Equity** | **20,047,237** | **19,450,844** | Consolidated Income Statement Highlights (in R$ thousands) | Account | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Total revenue and income** | **17,030,861** | **14,860,096** | **13,347,390** | | Net revenue from services rendered | 7,424,856 | 6,532,005 | 5,940,456 | | Net income from financial instruments | 9,606,005 | 8,328,091 | 7,406,934 | | **Income before income tax** | **4,985,967** | **3,936,348** | **3,444,656** | | **Net income for the year** | **4,514,840** | **3,899,391** | **3,580,211** | - The independent auditor, PwC, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[960](index=960&type=chunk)

Core Insights - Brazil's newly launched payroll-deductible loan program for private sector workers is projected to add approximately 0.6 percentage points to GDP growth, equating to nearly BRL 70 billion (around USD 11.7 billion) annually [1][2] - The program, initiated on March 21, 2025, aims to provide affordable credit to 47 million formal employees, including household and agricultural workers, through the Digital Work Card app [2] - Strong demand for the loans is evident, with over BRL 4.5 billion (approximately USD 750 million) in loans granted shortly after the program's launch [2] Economic Impact - The program is viewed as a strategic macroeconomic lever, allowing households to replace high-cost debt with lower-interest payroll loans, thereby increasing disposable income and stimulating consumption [3] - XP has revised Brazil's GDP growth forecast for 2025 from 2.0% to 2.3% and for 2026 from 1.0% to 1.5%, with an optimistic scenario suggesting a potential increase of up to 1.0 percentage point in GDP growth if adoption accelerates [3] - The program is expected to soften the impact of global economic challenges and tighter monetary conditions, showcasing the resilience of Brazil's economy [4] Mechanisms of Impact - The analysis identifies two key transmission effects: - A substitution effect where consumers replace expensive debt with cheaper loans, leading to a GDP impact of +0.35 percentage points [5] - An incremental effect where increased credit access stimulates consumption-led lending growth, contributing an additional +0.2 percentage points to GDP [5]

Core Viewpoint - XP Inc. is facing serious allegations of operating a Ponzi scheme, leading to a significant decline in its share price after a report was published by Grizzly Research, which claims that the company's profits are unsustainable and dependent on misleading financial practices [1][3]. Group 1: Allegations and Investigations - A report titled "XP's Entire Profits Are Dependent on What Insiders Call a 'Madoff-Like Ponzi Scheme'" was published by Grizzly Research, causing XP's share price to drop over 5% [1][3]. - Hagens Berman, a prominent investor rights firm, is investigating the allegations against XP and is encouraging affected investors to come forward with their losses [1][2]. - The investigation is focused on the accuracy of XP's statements regarding its business model and its claims of improved internal controls over financial reporting [2][3]. Group 2: Specific Claims from the Report - The Grizzly Research report alleges that XP is running a Ponzi scheme through certain derivatives sales to retail clients, misrepresenting these as proprietary trading profits [5]. - A fund called GLADIUS FIM CP IE, which reportedly returned over 2,419% over the last five years with low volatility, is central to these allegations, suggesting that without this fund, XP would be unprofitable [5]. - The report indicates that the profitability of Gladius is tied to a product called COE (Certificado de Operações Estruturadas), which XP aggressively markets to Brazilian retail clients [5]. - Former employees have claimed that the scheme relies on continuous inflows from COEs, and if these inflows cease, XP could face significant financial obligations it cannot meet [5].

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks in various market conditions, focusing on undervalued companies based on fundamental analysis [2][3]. Company Summary - XP (XP) is highlighted as a strong value stock, currently holding a Zacks Rank of 1 (Strong Buy) and an A grade in the Value category [4]. - The stock has a P/E ratio of 8.39, significantly lower than its industry's average P/E of 14.69, indicating potential undervaluation [4]. - XP's Forward P/E has fluctuated between 1.97 and 12.76 over the past year, with a median of 9.81 [4]. - The PEG ratio for XP is 0.59, compared to the industry's average PEG of 0.97, suggesting favorable growth expectations relative to its valuation [5]. - XP's P/B ratio stands at 2.07, lower than the industry average of 2.62, indicating an attractive valuation based on book value [6]. - The P/CF ratio for XP is 8.51, compared to the industry's average of 14.53, further supporting the notion of undervaluation based on cash flow [7]. - Overall, these metrics suggest that XP is likely undervalued, making it an appealing investment opportunity at this time [8].

SAN FRANCISCO, April 03, 2025 (GLOBE NEWSWIRE) -- On March 12, 2025, investors in XP Inc. (NASDAQ: XP), who purports to be “a leading, technology-driven platform and a trusted provider of low-fee financial products and services in Brazil,” saw the price of their shares decline over 5% after a short-seller published a report titled “XP’s (Nasdaq: XP) Entire Profits Are Dependent on What Insiders Call a ‘Madoff-Like Ponzi Scheme.’” Prominent investor rights firm Hagens Berman is investigating the allegations ...