Good evening, everybody. Thanks for having us here in this second quarter results event that we are holding here with Mr. Bruno Constantino, our CFO; and Andre Martins, together with me, Carlos Lazar, are part of the Investor Relations team of XP Inc. In today's event, we will be holding a presentation for all of you. This presentation has a disclaimer on Slide #2 that I would like to ask you all to read. Additionally, we're going to have an audio/video to present during the beginning of this presentation that I also would like to ask you to control the volume of your device in this -- for this event. And finally, by the end of Bruno's presentation, we will be having a Q&A session. [Operator Instructions] So by the end of his presentation, I'm going to be, again, having this information available for you. And so we'll not take any longer here, I would like to ask Bruno to continue the presentation.

Okay. Thank you, Lazar. No mister, Bruno Constantino, that's fine. Good evening, everyone. Thank you for joining us for our third earnings call with the market, about the second quarter of 2020. Before we get started talking about these opening remarks, I would like to say that, first of all, we had a very tough, I mean -- and by we, I mean, the whole world in this first semester. A lot of volatility, uncertainty. We were heading for a year of growth all over the world, and then we all were caught by surprise with a black swan, this pandemic. And I believe that as we move forward into this pandemic and its effect, XP, and by XP, I mean our close to 3,000 employees plus 7,000 IFAs, we were able to show our resilience to adapt, we all had to; to strengthen our culture, what I believe to be our main competitive advantage when investors ask me, I always go for the culture and our people; and also to reinforce our values, the big dream to have an open mind in our entrepreneurial spirit. And all of that together made us able to deliver the results we are going to share with you. And as Lazar mentioned, we have this short video that we would like to share with all of you that will touch point in everything that happened during this first semester of 2020. So please, Andre, I hope it works. Let's see. [Presentation]

Okay. It worked. So this short video is just to present some highlights, but let's go to the presentation, and I will try to be as short as I can, so as fast as I can, so we can go to the Q&A. So going directly to our KPIs and financials of the second quarter this year, we start with our assets under custody. As you can see on the left, we reached, at the end of June, BRL 436 billion of custody, a 59% increase year-over-year and compared to the BRL 366 billion of the first quarter this year, almost 20% increase. Part of that was market appreciation during the second quarter. But most relevant, I think we saw the net new money inflow picking up, especially in June, because of our offer that we did in July, end of June, beginning of July. We presented a guidance. We had to be very conservative about this guidance, considering when we established the guidance, we were in the mid of June, first half of June, and with the lawyers and the banks in the syndicate, as we had an offer, we had to be sure we were not going to get numbers below the bottom of the range. In terms of net new money, we had a guidance between BRL 10 billion to BRL 12 billion for June. We hit more than BRL 14 billion, the highest level compared to even pre-COVID numbers. When we go to active clients, it's no different. We reached the number of 2.4 million clients at the end of June, 81% increase year-over-year. And we also released -- we had a press release when we talked about Expert, our main event for the year. And we mentioned that because of Expert, we get momentum in…

Thank you, Bruno. So let's start the Q&A session. [Operator Instructions] We already have some questions here, Bruno. I'm going to start with Otávio Tanganelli. Can you dig a little further in the restructuring you mentioned to lead to such a low effective tax rate? Is this sustainable going forward?

Okay. Yes. Otavio, this structure is what I explained. We have cash in different companies in our group. We have 30 companies, as I mentioned, offshore and onshore companies. And because of the proceeds of the primary, of the IPO in December last year, we kept most of this cash at XP Inc. level. And XP Inc. has that effect, it's a 15% tax rate that in terms of the accountability, it says 0 because the revenue recognition is net of taxes already. And that brings the effective tax rate down. If it's sustainable going forward, yes, it is sustainable. I wouldn't -- I mean, the first semester of this year, our effective tax rate was close to 17% in the group. If we take the midpoint of 0% and 45% that I mentioned before, we are talking about an effective tax rate of 22.5%. So I would say that our tax rate should be between 20% to 25%. But again, there is volatility there. It can be lower, it can be higher. It will depend on the market condition, the mix of revenue, where the revenue is in our companies in the group.

Again, in the same subject, Bruno, Mario Pierry also -- I mean, it's running well below the historical levels, the tax rate. Consequently, the net margin is above 29%. So much, much above also the mid- to long-term guidance of 18% to 22%. Are you planning to revise in your guidance?

Yes, Mario, you're correct. And we want to think about it after 1 year at least because this guidance that we gave is not annual guidance. We decided not to give annual guidance. It's more a long-term guidance, mid- to long-term guidance. And by that, we mean 3 to 5 years, right? And we haven't had 1 year after the IPO yet. So we think it's -- the right thing to do is let's wait for 1 year and then think if we should revise the guidance. But you're correct, the actual margin -- adjusted net margin is much higher than what we gave as a mid- to long-term guidance, basically because of this effect of the primary proceeds of the IPO in -- at the XP Inc. level, bringing this lower effective tax rate that was not taken into account at the time of the guidance. So we should revise, but after 1 year. That's what I'm trying to say here.

Okay. From Jorge Kuri, to what extent was the jump in the revenue positively impacted by the high trading during the quarter given the volatility? And what would be the revenue adjusting for this event? And also how it's trending now, the third quarter, when we don't see any more volatility as we saw priorly? And one more, which is the -- what is the outlook for 2021? I guess it's also regarding revenue.

Okay. Yes. The revenue -- the volatility happened basically, I mean, in March, right? March was when we had the circuit break and everything else, then the volatility starts to accommodate. And we keep seeing high-volume trading despite the volatility reducing over time. When we look forward, it's hard to tell, I mean, we don't have too much volatility right now. And we presented the numbers of daily average trades at 2.9 million in July, our record -- monthly record ever in our history. So I think there is much more to do with the equitization process in Brazil than volatility itself. So the revenue, yes, you are correct. It was impacted by that, by the volatility, but mostly by these equitization trends that we have in Brazil. And we don't see that reducing the pace going forward, especially in an environment with 2% interest rate in Brazil and a very underpenetrated market when we think about the stock market as well. I don't know if I missed any other point of Jorge.

The trend, the trends for the future, for the near future, 2021 and so on.

In terms of the take rates?

Yes, yes. And just putting together here Mario Pierry's question also, if we have any ability to maintain the revenue about 1.4% when market rates are around 2%.

Okay. Okay. The trend -- revenue yields, the take rate, I am always conservative when I talk about it because for real, there is volatility there depending on where the mix is. When we have more equities and futures and even fixed income or financial products as we have had so far in this year, that tends to be a higher take rate at the end of the day, but it's also a function of other products that we keep adding. Let me give you one example. Credit card. We are in beta test, but when we have the revenue of credit card, by adding new products, that goes to retail because the clients that are using this product and providing this revenue is a retail client, right? And there is no AUC attached to that revenue. So it's going to be a revenue on top of the existing AUC. When you think about that, only by this math, revenue yield should go up. That's a confusion that a lot of people make. When we think about the 1.4, people think about like a fee paid by the retail client. That's not it. That's not it. Not even brokerage. Just to give you another number. If we only look for brokerage in that revenue yield, it's less than 30 basis points, okay? So if, for example, we got this question from international investors about the trend of brokerage fees going to 0 in the United States. If that happened, for example, in this 1.4, our revenue would go down to 1.1 or even a little bit higher than that. If that brings another kind of revenue that is not in this math that I just explained. So at the end of the day, the trend of the revenue yield, it…

From Christian Bolu from Autonomous Research, what drove the 300% year-over-year growth in the net income from financial instruments?

That's financial instruments in there, we have several different instruments. The main relevance, a lot of, for example, in the equity market, derivatives that retail clients want to protect their positions or trading derivatives and also the structured notes known as COE in Brazil, the certificate operation structured notes. That it's a new product. We already had this product. But this year, it's a new product because of the bank. So as we have the bank, we are able to issue those structured notes. Before that, we relied on partners and other banks that also issue, and we keep also selling structured notes from other banks in our platform because we are this investment ecosystem, so it's open for whoever wants to make a good use of it, providing good products for our investor clients. But because of our bank, we were able also to grow. And we expect that line to keep growing a lot going forward because that's just a new product that we didn't have before. Also for institutional clients, it's the same thing. Because of the bank, we can provide derivative products for institutional clients, independent asset managers, for example, or corporate clients that want to make use of our secondary markets and our ability to -- because of the flow that we have to provide good prices for those clients to have their positions and match that with our retail client base as well.

Okay. Some questions about competition here, Bruno, from [ Thiago Gomes ] and also from [ Teeja Boye ] So basically, the question is how -- can you please share some thoughts on the competitive threats to your retail business from other platforms? What do you think is their strategy in going aggressively against the IFA network and what we expect in terms of AUC departure as well?

Okay. Yes. I know this topic has been a hot topic in the moment, the competition in the IFA business. So I will take the opportunity of this question to -- if you allow me, to step back a little bit and explain the framework of the IFA business in Brazil. And then I will provide what I believe to be the consequence of this competition intensifying going forward. Because as we have said, competition is going to intensify. It's a natural thing considering our leader position and all the success that XP has had, it's a natural thing, and we believe it's going to keep like that going forward. So number one, I'd like to share with you some points. As you know, XP started as an IFA and has worked hard to develop this profession in Brazil. So the fact that other platforms want to mimic what XP has been doing for years down the road, in our view, is a recognition that our model is in the right direction. That's number one. Number two, when we think about the potential of this profession, the IFA profession going forward in Brazil, taking into consideration how many bank managers Brazil still has, the ongoing reduction of branch already announced by the banks and this low interest rate environment, it seems to us that the growth of the IFA profession is far from the end. Number three, when we look at the numbers of new IFAs coming to the market, I don't know if you follow those numbers, but it's a clear recognition that the IFAs or the new IFAs recognize XP as the best brand and platform to allow an IFA to succeed in this new endeavor. And why am I saying that? Because, for example, in the last…

Okay. From [ Teeja ], another question here. Can you please help me think about the revenue potential and timing for the new products pipeline, lending, cards, digital banking, insurance distribution and so on?

Yes. We don't have a number yet to give to the market in that sense. As I said, those are brand new business. You're going to see most of those business impacting the retail revenue line, but we also have institutional, for example, institutional clients, as I mentioned, with the bank and financial products. It's another revenue line that is impacting institutional revenue line. But we see a lot of potential because, for example, I mentioned some, okay? If you look at our Limite and Resgate Express line, our structured notes as leverage for margin loan business that we don't have in Brazil in scale. It's a brand-new business in scale. We are small. As the end of this second quarter, we had something close to BRL 400 million in our balance sheet, basically nothing. There is a lot of potential of growth there as well. And the credit card is just starting. We are going to open for the public in the fourth quarter, and it's going to skyrocket. So no question it's going to contribute in our revenue, but we don't have a figure to share with you right now in terms of how much it will impact the revenue going forward.

A question from Mariana Taddeo and also Tito Labarta, it's practically the same question, about -- can you please share with us about the net inflow in the near future and also if the BRL 14 billion is sustainable?

So the future, we're talking about the future, we have July, right? So it's only 1 month. What I can share with you is that July, we kept a very healthy base as in June. And we believe that the worst because of the COVID crisis is behind of us. It's the BRL 6.9 billion that we presented in April as net new money. It's behind of us. So we are seeing healthy base of growth coming back. The IFA network was the part that was most affected by the crisis because we also could not have the tests, the certification for new IFAs to come to the market and the restrictions of the lockdown impacted more the IFA than the XP direct channel. But now it's resuming. Things are getting back to normal. And we believe that we're going to keep a healthy base going forward.

For second half 2020, as issuer services resume activity and that boost distribution revenues, is it fair to expect revenue yield expansion?

On that perspective by itself, yes, it is. But it will depend because remember, it's always a function of the denominator and numerator. So you're talking about the numerator, but it depends if the denominator, the AUC growth, with AUC that is not bringing revenue right upfront, you see that it's not, yes, bringing revenue right upfront, then the impact should reduce a little bit. So it will depend. If you say that, okay, I'm going to be very conservative in your AUC projections going forward", I would say, yes, I should expect revenue going up. If you say, I'm going to be really aggressive about your AUC going forward, maybe the revenue yield could go down, so a little bit. It's a function of numerator and denominator. One thing that I didn't comment, but I think it's important to highlight going forward. We kept hiring new people into our company. But of course, because of the COVID crisis, even the challenge of onboarding, we reduced a little bit the pace. And now with everything that we saw when we got into this crisis, we didn't know how it would work for XP. And with the benefit of what happened and how our people engaged to make the impossible possible during this pandemic, we are confident about the future and what we can deliver and all the opportunities ahead of us. So we decided to resume at full speed our other projects and hiring people. So we might see SG&A going up a little bit in the short term. But again, it's something that will pay off really soon as we keep adding new revenue lines and new businesses in our ecosystem.

Another one also from Mario Pierry here. What is the trend in terms of commission expenses that you can share with us?

Yes. Commissions are already very, very high. There is -- the trend in commissions expenses is basically a function of which products, it's a mix of products, more than anything else. So I don't see -- you're going to see -- because of the investments that we are doing in the IFA network, you're going to see that line combine the commission and incentives, everything together, growing over time. And that's where the margin compression comes from. That's what I talked about, the 200 basis points that we roughly estimate, yet to be seen. Taking only this effect of the investments we are making in the IFA network as a whole. But I wouldn't say there is a pressure for specific commissions there because they are already very, very, very high. And people that -- if you want to pay 100% of commission, like gave everything, for the IFA and stay with nothing, you can do that. But at the end of the day, I mean, it's not going to be profitable there. I don't know -- I cannot see any numbers from any competitor showing the health of their IFA business. Ours is healthy, it's a partnership, a long-term partnership with our IFAs because, again, they are entrepreneurs, and we are here to make history. So we really make a history in a strong purpose. That's a huge difference when we look at other players in the market. We are here to really transform the financial market, doing the right thing for the client, side by side. When we announced this fixed fee for our IFA network, the feedback was impressive. They all were -- look like thanking us for that initiative that they would have both options to share with the client. And I believe that the commission base is going to be, by far, the largest one because at the end of the day, depending on what investments the client has, the fixed fee is more expensive than the commission base. So if you have a commission base with transparency and with suitability and doing the right thing for the client in the long term, it's the best model. I have no question about it. But again, it's going to be a decision of the client. In the IFA network, they looked at it and said, "Great news, we are with you. Let's go for it." So it's a long-term partnership.

From [ Guilherme Oliva ], do you have any estimated impact in XP Inc.'s numbers considering the future launch of the XP bank?

No. As I said, we are not giving specific numbers because of the bank, but the bank is -- it's another tool that we have in our ecosystem that allow us to provide products that, before the bank, we could not. So the credit card is one of them. The structured notes issued by our bank, the COE, it's another one of them. The derivatives with institutional clients and corporate clients, its counterpart, it's another of them. So there are several products there that we have had revenue from those products that we didn't have before the bank existing.

One final question here. Where we will be in 2025? How big are projects for XP for the next 5 years? And what is the company's market share targets?

No. We don't have a market share target. It's hard to say where we are going to be in 2025 because when you make that question, I'd like to go back to 2015 and make that same question. And I remember, I am here since 2012. And in 2015, I remember us thinking about the long term and probably -- despite the dream big part of our culture and value, probably I wouldn't say we would be where we are right now. Again, I think that when we think -- when we talk about the long term, we can do anything. It's the second value that we have, make the impossible, possible, the dream big. There is nothing impossible. And the most important thing is for us to keep our culture, to keep our DNA intact to be really not only hard workers, but to have this obsession about doing the right thing for the client, doing the best thing. If we look at competitor doing a better thing than us, we have -- we are not ashamed of saying, "Okay, you're right. We were wrong. Let's do it," or "You have a better thing, let's match." We are about the client in the long run. And we have built this unique ecosystem. But still, we are very, very, a small part of the whole financial industry in Brazil that is highly concentrated in those 5 banks. So when I think about it, I would say that in 2025, I mean, I don't know. I don't know -- I don't want to give here a guess, but we can do much more. What I would tell you is the following. We can do, in the next 5 years, much more than we have done in the last 20 years, that's what I believe.

Well, thank you, Bruno. Thank you all for joining us in this conference call. Our Investor Relations area continue to be completely available for you to discuss any matter of the second quarter results and any other subject that you wanted to raise with us. Thank you, and have a good night.

Thank you very much. See you in the next call.

Bye-bye.

Bye-Bye.