Good evening, everyone. I am André Martins, Head of Investor Relations of XP Inc. On behalf of the company, I'd like to thank you for your interest in our earnings call. Welcome to the fourth quarter and full year of 2022 earnings call. Today we have with us our CFO, Bruno Constantino. We will both be available for the Q&A session right after the presentation. Whoever wants to ask a question can raise your hand on the Zoom, and we will attend you on a first come first serve basis. We have the option of simultaneous translation to Portuguese, you have a button as well on the Zoom if you want to turn on the translation. Before we begin our presentation, please refer to our legal disclaimers on page two, on which we clarify forward-looking statements, their definition, and we have on the SEC filings section of the IR website, the definitions as well regarding those legal disclaimers. Now I'll pass the word to Bruno. Good evening, Bruno. Good evening. Thank you, André. Good evening to all of you. Thank you for attending our 13th earnings call presentation. As a full year presentation, I will take longer than usual in the introduction part, giving more context about how XP business model works in different macroeconomic cycles. I will also mention the important achievements and lessons learned in 2022. On slide five, we highlight how XP benefits from a positive market environment. The recent bull market that went on until 2021 attracted many Brazilians to the capital market, as you know. From 2018 to 2021, we had an increase of more than 4 million individuals coming to the market. Still nothing compared to the size of the Brazilian population, as you know. A lot compared to less than 1 million we had in 2018. The main investment platform in Brazil and having the biggest specialized distribution network, XP benefited a lot from this scenario with our disruptive and scalable business model. From 2018 to 2021, we grew our client assets by a CAGR of 59%, our revenue by a CAGR of 58%, and our net income by a CAGR of 98%, basically doubling our net income for three consecutive years, way above market and our own expectation at IPO. comes 2022. A very challenging year, especially for the investment advisory business. With the Selic rate rising from 2% to 13.75%, there was a meaningful change on investors' willingness and sense of urgency to diversify investments from low risk fixed income options. This movement, which also was seen in other asset classes, it's clearly shown by the almost 30% reduction in individuals equities average daily trading volume in full year 2022 compared to 2021. Other external factors contributed to the standby mode and lower client activity we saw in 2022. I will name five of them. Number one, the global inflation and restrictive monetary policy all over the world. Number two, rebound of COVID in early 2022. Number three, war in Eastern Europe. Number four, uncertainty, pre- and post-elections in Brazil. Number five, the World Cup fever in November, December, which led to a reduction on actual business days. I know everything I'm saying here is well known by each of you, but it is important to contextualize so everyone can better understand the impact of those events, not only in the full year 2022, but on a quarterly basis as well. I will talk more about it in our results section. Going back to the list, except for global inflation and restrictive monetary policy which happened throughout the whole year, COVID rebound and war happened in the first quarter 2022, and elections in Brazil and World Cup happened in the fourth quarter 2022. Not by coincidence, the two weakest quarters of XP last year. This is important to understand. Last year was unusual when looked on a quarterly basis. In our view, it's better to look the full year instead. We had a lot of volatility between segments on a quarterly basis. It will become clear when we get to the results part. We have some slides to share with you. Going back to the advisory business. The financial advisory business is based in human interactions. Circumstances which make these interactions less frequent, as we had in the fourth quarter, for example, does have a negative effect in the investment business. Going back in time on the bar graph in the right of the slide will allow us to verify the evolution of our business. I know that in 2014, XP was a different business, much smaller, but the point to make here is to show how resilient our ecosystem became over time. The last monetary tightening cycle in Brazil began in 2013 and took the Selic rate close to the current level of 13.75%. It took Brazilian Central Bank two years and four months to complete the tightening cycle, and the total magnitude of it was 700 basis points. In 2014, XP net income fell 40% relative to 13, as 80% of our revenues at that time came from equity. With the market worsening, our main metrics, net inflow, new clients and IFAs were strongly affected as well. We were much more, I'll say, a better play at that time. Now, fast-forward to 2022. The recent monetary tightening cycle has been faster and more severe than the last one. It took the Central Bank only one year and five months to complete the tightening cycle, and the total magnitude of it was 1,175 basis points. It went from 2%- 13.75% really fast. In 2022, different than what happened in the last cycle in 2014, our revenue grew 10% year-over-year, and our net income remained flat year-over-year. The recent investments we have done in the new verticals helped to mitigate this challenging scenario, improving the resilience of our business model. Let's talk a little bit more about those investments and also about some lessons learned in 2022 in the next slide. Since the IPO, we have been investing in new verticals, as you know, and according to our strategy to go beyond investments to become dominant in investments. We are confident that our strategy is in the right track, and by going beyond investments, we achieve three main things. One, we increase the LTV of our existing clients. Number two, we enhance the mode of our ecosystem. Number three, we increase our total addressable market. Basically, in three years since the IPO, we have built our own insurance company, XP Vida e Previdência, starting with retirement plans and recently moving into life insurance. We have created a bank from scratch, starting with collateralized credit, moving into credit cards, debit cards, and recently digital accounts. We have developed an international investment business also from scratch instead of doing it inorganically. We have created XTAGE, our digital assets platform, organically as well, allowing our clients to buy crypto assets in the same app they use to invest. We have invested in corporate business, basically nonexistent in 2019, year of our IPO, which made a revenue of BRL 600 million last year. Finally, we have the expansion of the internal advisory team, our B2C, improving our total specialized sales force, which we expect to reap the full benefit of it when the macro cycle reverts. These projects demanded an initial allocation of financial and human resources that is decreasing as they mature. Honestly, I don't remember in our history a period where we have done so much and so fast. Maybe here is a lesson learned in 2022. We as a company and as entrepreneurs, we are disruptors. We always want more. It's always good to remember that Brazil is one of the most concentrated financial industry in the world. It's still. You take that in a very benign scenario of recent years where we double our net income for three consecutive years. We must recognize this environment has influenced the pace of our expansion. As I said, we have executed our plan too fast, and as you can see, we heavily extended the headcount base almost three times in three years. People is 70% of our SG&A. We added 1,200 employees in 2020 and 2,500 in 2021, and we have done it right before a market downturn. Again, we have no doubts that each of these initiatives will add value in the long term and are 100% connected with our strategy. We must be humble and recognize that we have entered 2022 with the wrong cost structure. It's a fact. Now it is time to operate on a much leaner cost structure going forward. The ongoing transformation process that XP is going through, and I've talked about it in previous quarters, will be key to help us execute this expense reduction without jeopardizing our service quality or ability to advance with our strategy. Just to connect the movements, it's important to remind that this transformation process has started through our tech team at the time led by Maffra when he was our CTO, and expanded to the whole company when he became our CEO at the end of second semester 2021. With a linear cost structure, a greater addressable market, and advancing in our core business, which we are gonna show in the next slide, we believe XP is well positioned for tough times ahead. Tough scenario, as we all know. 1,175 base points in just one year and a half. Still, our main KPIs for the investment business kept expanding. At a lower pace, of course, but expanding. Last year, more than 2,000 independent advisors on a net basis joined XP's platform, which reinforced not only the potential of this profession, but the leadership of XP in attracting new IFAs into our ecosystem. If we were a new broker-dealer starting up in 2022, very tough time to start a business, we would be, by far, at the end of the year, the third largest IFA network in Brazil in one year, only behind XP, the dominant player, and BTG. Net inflow totaled BRL 155 billion. We believe this shows the resilience of our distribution model and the premium quality of our client base. We added 406,000 net new clients in our ecosystem. Just as a reference, it took us 16 years of existence to achieve that number of clients. Our client assets kept growing as well, reaching BRL 946 billion at the end of the year. In summary, despite the strong headwind that continues in 2023, XP was able to keep growing and advancing in its core business KPIs, net inflow, IFAs, and net new clients. When we have the next tailwind scenario, and it will happen, our ecosystem is going to be much bigger and complete than when the last bull market happened. We are expanding our ability to grow exponentially when a reversal of the tightening monetary cycle occurs. Cross-sell. Cross-sell is one of the biggest opportunities we have beyond investment. The clients are in the house and have already trusted us with the most precious thing they have, their savings, which we are honored for the trust. The combination of our client base growth and the maturation of new products in our platform presents the best compelling opportunity for revenue growth in 2023, considering we are going to have very high interest rates for longer. If that is the scenario, cross-selling is the most compelling opportunity for revenue growth that we have. Credit cards, insurance, credit, retirement plans, digital accounts, and international investments accounted all together for BRL 1.3 billion of revenue in 2022. In the previous year, 2021, it was less than BRL 600 million. More than double in one year. We believe a growth of 50%-60% this year, 2023, is pretty reasonable considering the low penetration of these products in our existing client base, as you can see in this slide. International investments, for example, which should benefit from the current scenario for diversification purpose and risk management as well, has less than 1% penetration in our client base. Credit cards, the most mature product that we have, still has less than 20% penetration. We will continue to have businesses inside our ecosystem with high double or even triple digits of growth, even in a challenging macro environment. Expenses, the lessons learned in 2022. SG&A grew alongside headcount and new verticals, as I already said, reaching BRL 5.6 billion ex incentives in 2022. We went from BRL 1.9 billion in 2019 to BRL 5.6 billion in 2022. That's almost BRL 4 billion in three years. We have done more with more. Our SG&A expense ratio went from 37% in 2019 to 42% in 2022. Our main priority for this year, 2023, is to regain the inherent operating leverage of our business. How? Through a company-wide adjustment of expenses that already began in fourth quarter 2022. Plain and simple execution. As I've said already, helped by the ongoing transformation in the company. This is an important point because what we are saying here is our business, which has always had a strong operating leverage, with the ongoing transformation, will increase that operating leverage through a much leaner cost structure, sustainable and not impacting our deliverables or clients, which will show its maximum benefits in the next market upturn. Different from 2022, when costs were controlled but not reduced, the current initiatives should allow for margin expansion, even in tough scenarios for revenue growth, and is 100% under our control. To better align market expectations around expenses, we estimate that SG&A ex incentives for this year will range between BRL 5 billion-BRL 5.5 billion. Which at the bottom of this range implies a nominal reduction of 11% year-over-year. That is connected to our EBT margin guidance as well, of 26%-32% in 2023-2025, moving from the bottom to the top in the period. Now moving to the financials. On slide 12, we provide some context on the headwinds faced especially by our advisory channel in Q4 2022, which relies on human touch and availability I mentioned earlier. The post-election period, coupled with World Cup and the approach of holidays, added a layer of difficulty on the advisor-client interaction in the quarter. This is important. When you analyze our business, you cannot only look at average daily trading volume, what's going on with the B3, because the advisory business, it demands a relation of advisor and client. That's why January, for example, it's a weak month because people are on vacations, clients and advisors. This kind of interaction, whenever they have difficulties, it has an impact. In the fourth quarter, it's exactly what we lived. Because of that, and also because of lower official business days relative to third quarter, retail revenues didn't grow as expected. You can also see that on the left part of the slide, the fourth quarter seasonality usually is the strongest quarter of the year because of strong capital market activity and performance fees that happens in the fourth quarter. It didn't work last year. Last year was unusual in that sense. From 18-21, fourth quarter represented on average 30% of total revenue for the specific year. Last year, it represented less than 24%. Also, after a record third quarter last year was our best quarter, when our gross revenue reached the BRL 3.8 billion, helped by anticipated deals and traded volumes in institutional and corporate and issuer services, that in the fourth quarter, faced a lesser favorable quarter, as previous signaled in our last call, earnings call. Together, just to give you a sense, institutional and corporate and issuer services represented 80% of the sequential revenue decline quarter-over-quarter. Looking at the full year 2022, which we believe is the best way to look at the results of XP last year because of this disparity that we had among quarters throughout the year. Our gross revenue grew 10% relative to a strong 2021, the high of the bull market cycle, which reinforces what I said earlier, the resilience of our business, even in tough scenarios. The retail segment, the most relevant one, and together with issuer services, were the most impacted by this challenging macro environment in 2022. Still, retail grew 4% year-over-year, despite the drawdown seen in the equity part, the most relevant for retail rev of 21% year-over-year. Equity in 2021 represented 55% of the retail revenue. In 2022, decreased to 42% of retail revenue. What helped retail revenue in investments? Number one, fixed income, plus 17% year-over-year. Number two, float. That is in other retail, 70% growth year-over-year, both of them benefiting from higher interest rates. Still in retail, we also saw the strong contribution from the new verticals initiatives. Retirement plans, for example, grew 47% year-over-year. Credit, 54%. Insurance, 62%, and cards, 229% year-over-year growth. Institutional and corporate both had growth in 2022, and strong growth. Institutional, 50%, and corporate 250%. Institutional, that is a more mature revenue line, benefited last year from mostly FICC revenues, fixed income, currency, and commodities. Corporate benefited from the natural growth of a new business that had a very positive year in 2022. On the other hand, issuer services decreased 33% versus a very strong 2021, basically due to a weaker capital market activity, especially in ECM comparing year-over-year. When we look at our gross margin, despite on an annual basis being virtually flat in 2022 compared to 2021, gross margin fell 7.1% in fourth quarter versus third quarter 2022. This margin compression was mainly related to, number one, revenue mix. There was a change among quarters. Remember that institutional and issuer services, they have almost 100% gross margins because commission, which is the most relevant line in COGS, is mostly related to retail investment revenues. Prepaid expenses write-offs. We had this one-off in the fourth quarter regarding ended contracts with IFAs. Remember that we have a prepaid expenses related to a long-term contract with the IFAs. If one IFA leaves, we write off everything that is prepaid. On the other hand, we receive the fine of whatever we have paid in double, and that goes in other income in SG&A. Third, we had a change in interchange fee recognition criteria aligned with other players in the industry. As of fourth quarter 2022, interchange fee is recognized upon transaction. It talks directly to the TPV that we release. Looking at this year, 2023, we expect gross margin to remain stable relative to 2022 and 2021 on an annual basis, despite volatility between quarters. It's always good to remind that between quarters, we can have volatility as we had last year. Moving to expenses. When analyzing SG&A expenses, we prefer to exclude revenue from incentives from Tesouro Direto, B3, and others within other operating income. You have that in our financial statements. Despite being a recurring line, its magnitude is volatile by nature. As a reference, this line was a positive number, $285 million in 2022, a positive $306 million in 2021, and $353 million in 2020. When you look at the last three years, we always had a positive reduction in SG&A coming from revenues that are not recognized in the top line, but inside operating income in SG&A. We are gonna have something in 2023. I have no doubt about it. The magnitude of it is hard to forecast. That's why when we look at expenses, we exclude this revenue, and then the SG&A is higher. Edge in the SG&A expenses, excluding the incentives, grew 18% in 2022, reaching BRL 5.6 billion. People expenses, as I said, represent 70% of total, while non-people, 30%. As previously mentioned, for 2023 expenses, we are estimating a range of BRL 5 billion-BRL 5.5 billion. What's gonna drive this range is mostly the revenue growth and the performance of the business. For instance, if we think that 2023 is gonna be more of the same in like 2022 and our revenue would grow the same thing, the 10% for example, we would be in terms of SG&A at the bottom, BRL 5 billion. To get to the top. Our revenue should grow at high double digits. That's why we have this range, because there is a component of our SG&A based on performance, which is the bonus, that can vary depending on the results. In fourth quarter, looking at the right, SG&A was flat relative to fourth quarter 2021. On an annualized basis, it was BRL 5.5 billion already within the guidance range. Over the next quarters, we expect further reductions in SG&A. Net income. Net income is basically a result of everything that I just said. 2022 net income flat year-over-year, BRL 3.6 billion, with a slightly higher earnings per share growth due to the buyback program that we've been fulfilling. During 2022, we have bought back BRL 1.8 billion, of which BRL 1.3 billion only in the fourth quarter. On the quarter, our net income was $783 million, which fell 21% year-over-year and 24% quarter-over-quarter due to the impacts that I already explained in the previous slide. Revenue to look and the gross margin compression is what explains this drop. Factoring in our expectations for the business and the SG&A guidance, we estimate 2023 net income to be between $3.8 billion and $4.4 billion. Usually, we do not give that kind of estimation on an annual basis, but we understand that in such tough macro environment and being harder for many investors to understand the impact in our, in our company and in our business, it would be important to give this kind of guidance for the year so you can follow in the next quarters to come. Finally, before we go to the Q&A, just wrapping up the main messages here. Expenses. Already talked a lot about it. Linear cost structure, that's the main priority. The transformation will allow us to expand margin on a sustainable way. Number two, Cross-sell. Already talked a lot about it. We have businesses with exponential growth. Number three, we keep evolving our strategic roadmap, and our business keeps getting better the way we look at it, especially when we compare to previous cycles. Number four, about the 2023 expectations are the guidance. Net income between BRL 3.8 billion and BRL 4.4 billion. SG&A excluding incentives between BRL 5 billion-BRL 5.5 billion. With that, I think we should go to Q&A now, André. Okay. Okay, Bruno. Thank you. Again, we have a lot of analysts on the line here, so I'll ask you to be patient. We will go one by one, answering the questions. First one, Rosman. Eduardo Rosman from BTG. Can you hear us, Rosman? Yes. Hi, Andre. Rosman. Hi, Bruno. How are you guys? I'm good. How are you, Rosman? I'm fine as well. Thank you very much. I have two questions. The first one, it's more related to the short term, and the second one more related to the long term. Do you prefer me to do both at the same time, or do you prefer? Let me just do the both of them. Okay. The first, the short term, you gave the guidance, which was great. Thanks. I think it helps. That guidance implies earnings growth, right? Year-on-year, I think it has to do a lot with your cost control, right? That's correct. How do you think that will evolve throughout the year, right? Because, my sense here is that first quarter is likely to be pretty weak, right? This year we know. Mm-hmm. It's very bad after the Americanas situation. January is bad. You don't have the, let's say, the incentives, you know, costs. As I know, usually you have some upfront costs, and then you benefit throughout the year, you know. It's fair to assume that the first quarter very likely is gonna be the weakest of the year, and then we're gonna be recovering over time. That's the first one. Mm-hmm. The second one, I think it's related to. It's more about the long term, right? We know that the short term is tough, so let me try to think about the long term here. Which I think it's an important theme, which is the partnership model, right? If you can, maybe talk a little bit more about, you know, the model, how it's working today. We know that you had a model in the past, which was the consulting group. All the partners were there, and that worked pretty well during, let's say, many years. Mm-hmm. You had to change, right? You had to change that because Itaú bought a big, big stake, you know, different times, you know. You changed that, you know, a few times, or a couple, I don't know. I assume there's a chance to change again. How crucial do you think, this partnership model, if you have anything to add to us because we think here is something very important? Okay. Thank you. No, perfect, Rosman. I mean, the first question about how we are gonna evolve over 2023 with the guidance, you are 100% correct. First quarter should be the weakest quarter in 2023. The Americanas events that you mentioned has a secondary effect in capital market activity. We know that DCM activity has been like, frozen, you know, especially in the distribution part where XP acts as a key role there. Yeah, first quarter, it continues to be a tough quarter. We do have the expense reduction that is 100% under our control, as I mentioned. We do expect, when we look at SG&A, to show already reduction considering the guidance that we gave. You also are correct when you say that, in the first quarter we had the benefit of the SG&A, because of the incentives, and we are not gonna have that in the first quarter. That's correct. As our guidance goes to SG&A ex incentives, it doesn't matter that much. Yeah, we are gonna see evolution of the SG&A in the first quarter, okay? Then we expect to keep evolving that throughout the whole year. Going to the partnership and the more long-term question, you already gave some of the answer when you mentioned what happened with Itaú. We liked a lot the model that we had in the past, you know, with XP Controle. We had to change that model after the IPO exactly because of Itaú. They went to super voting rights. Super voting rights should be for the controlling shareholders. It was the agreement. We had to accommodate that, and we didn't have, I would say, space to keep the same model that we had as a non-listed company. We started with the restricted stock units with a different vesting period. In the middle of the way, we improved the model that we had, learning from feedbacks and from experience as a new listed company. We are always thinking about improvements in our partnership model. That I can assure you, because that's the heart of our business, and we take that as a main priority. The model that we had in the past, not directly related to, you know, share price fluctuations. For example, take the model of return on equity model, where you buy and sell based on return on equity. We think it's a very good model because it aligns you in terms of the return of the company, in terms of, you know, cost reductions, for example, and you are not directly exposed to market fluctuations, but more about the fundamentals of the business. We like that very much. We don't have anything to announce right now, but what I can tell you is that we are always open and thinking about ways to improve our partnership model. The restricted stock units are working just fine. Can it be improved? We think yes. Great. Crystal clear. Would you think that when you have, if you do any changes at, or anything on that front, I think it would, it would be great, you know, if you could share with us. No, we would announce. No, we would announce. That's for sure. As I said, Rosman, and we think it's a priority in terms of, you know, it's a very important topic for the company, no question about it. Great. Thanks. Thanks, André. Thanks, Bruno. Thank you, Rosman. Good to see you. Okay. Our next question is from Mario Pierry. Just a couple of seconds. We have some delay. We are trying... You should announce that, André. We are trying a new model where we can see the analysts, whoever is asking the questions. It might have a delay. Hi, guys. thanks for taking my question. Hi, Mario. Two questions. You in the last quarter, I think you had changed your guidance to be on earnings before tax because of the volatility in the tax rate. I was wondering what kind of effective tax rates are you assuming on your guidance for the net income that you gave? The second question is related to your expense reductions, right? You talking about you reduced your headcounts by 5.5% in from December to January. I was wondering if you have any other plans, like in order to get to the bottom of your guidance, right? It's 11% reduction in SG&A. In order for you to get to the 11%, does it mean further headcount reductions, or does it mean cost savings in other areas? What kind of impact this could have on your on the growth of some of your other businesses? Perfect, Mario. Good to see you. Regarding the income tax rate, you're right. We gave the earnings before tax margin guidance, we know that the accounting income tax rate is tricky depending on the mix of revenue. That's exactly why we have this, I would say, wider range in terms of the net income, from $3.8 billion-$4.4 billion. We have many different assumptions here. I cannot give you a specific what we use to give this guidance because it depends from the range. What I can tell you is we are confident that we can deliver the bottom of the range. One simple math here to help you out is the following: Imagine that we are in 2022, the whole year. 14 billion revenue, BRL 3.6 billion of net income. We would have, instead of BRL 5.65 billion of SG&A, right? BRL 600 million of reduction in expenses would mean more than BRL 300 million additional to net income. With that, we would be able to reach the bottom of the guidance. Of course, as I answered the previous question, the year started in a very tough way because of what happened with Americanas, capital market activity, and so on. We do not expect the market to stay, I would say, dysfunctional throughout the whole year. Capital market activity should resume at some point. The companies need to roll over their debt. We have several investments in fixed income that mature around this year. All of that factor in is what give us the confidence with the guidance. I don't have a specific income tax rate to give you. Your second question about the headcount, you mentioned the 5.5. The 5.5 reduction is only comparing January to December. I would say two things here. Number one, yes, you can expect further reductions. The efficiency is gonna be constant throughout the whole year. Most important than paying attention to headcount is to pay attention to SG&A, right? We can have, for example, in third quarter last year, just to give you an example, third quarter last year, our headcount growth went up. We had a growth in headcount compared to the second quarter. We had a lot of interns and young developers that we had a partnership with Trybe that we brought in the company, and that's a different structure of layers. The transformation, the benefit of the transformation ongoing is exactly to have less span and layers, to have merge of leadership, to simplify. That's how the reduction in SG&A will come. Headcount decrease, it's happening, but I would pay attention to the reais, you know, to the expense itself. It's more relevant than the number of headcounts. That's what I'm trying to say. Okay. The impact that, you know, these headcount reductions could have on revenue growth. Oh, sorry, I didn't, I didn't answer that. None. That's what I tried to explain throughout the presentation. It's the benefit of the transformation. Whenever you have a transformation, it's natural to have a J-curve because you're gonna be working with more than you need. It's important, so you do not let anything fall off the table. We accelerated that. That process intensified when Maffra assumed as our CEO. Last year, the second semester, mostly in the fourth quarter, we accelerated a lot. The way XP now is organized through business units, it gives us more agility and efficiency in terms of the teams working together. That's the big benefit. We are not postponing any deliverable in terms of products or, you know, we are not jeopardizing experience for our clients, as I mentioned, nothing like that. We are not dropping anything. This is all related. Like, on the SG&A guidance that you gave, are you including any severance charges associated with these layoffs? Yeah. Yeah. Yeah. When We are. You're already in... That's not gonna be additional? No, it's not additional. We are including because, you're correct. We have severance layoffs, so everything. It's going to be in the first quarter, so basically most of it. When you talked about, you know, like the SG&A falling from 5.6 to $5 billion, the $600 million delta, and you said it'll be $300 million to the bottom line. We know that your effective tax rate has been close to zero. No, depends. Yeah, but depends on where... I'm using, you know, I would say a conservative approach in terms of where we are reducing the costs. Yeah, that's just a conservative approach. The tax rate, the accounting one is trickier than the one that we release when we have the equivalent. Remember that we do pay more tax than what is shown in our accounting because we have parts of our business where we do not recognize the full revenue. We recognize the revenue already net of taxes. That's what happens. We pay the taxes. Okay. Thank you. Thank you, Mario. Okay. I'm bringing Jeff in from Autonomous Research. Hey, Jeff, can you hear us? Hi. I can hear you. Can you hear me? Hi, Jeff. All good here. Great. Thank you. First, just a very quick clarification. The net income guide, is that on an adjusted basis or a GAAP basis? Oh, no, it's Jeff, it's on accounting base, not adjusted. Okay. We withdraw. We still. Unadjusted. It's the GAAP. Net income GAAP. We still release the adjusted net income, we have withdrawn the adjusted net margin guidance as we look at it, including the share-based compensation. Despite a non-cash expense, we consider an expense. Great. Thank you. We changed that in the last quarter. Great. Thank you. Then in terms of the pressure that you saw in the retail business and specifically in equities, how much of that is simply less activity and how much of that is product mix, kind of, you know, people trading cash equities versus coins and derivative products and things like that? What's driving the pressure there? Yeah. I would say activity. In the full year, it's, you know, we have equity parts, you know, clients migrating out of equity into more fixed income products because of interest rates. On a quarterly basis, in the fourth quarter, activity, not for the brokerage business, the trading part, but for example, you mentioned structure notes. Structure notes, I believe the industry fell like 20%-25% quarter-over-quarter. Yeah, there was less activity. That's basically what I would say in terms of the equity drop in the first quarter. Got it. Thanks very much. The base is low. The base is low now, Jeff, we've been in that trend for a while, right? Understood. Thank you. Bye, Jeff. Nice to see you. Thank you. Okay. Next in line, Domingos from JP Morgan. Hi, Domingos, can you hear us? Yes. Hello, everyone. Thanks for taking the questions. Two, I think more simple questions in here. First one is, you mentioned, you're now recognizing interchange at the moment of TPV. My question is, how did you recognize prior to that? Because it's the only way I could think of, you know, recognizing this, and it was a material impact, right? The second one is everybody had one-off impacts on lending. You know, big suspicions, I guess, go towards Americanas, but in any case, everybody had some sort of loss. I'm just curious, you know, if you had any one-off impact in your income statement this quarter. Appreciate it. Okay. No, regarding the interchange, Dom, was basically the installments we recognized basically on a cash basis, okay. The installment not paid, we didn't recognize, and we adjusted that in the first quarter. That's why we say it's related to the TPV. Our recognition was below what actually was the TPV. That's what we changed. Regarding one-off, I mean, we decided to not adjust anything for one-off, right? Because we always Operating business, you have one-offs every single quarter or every single day. If we would adjust anything for what we believe to be one-off, it would be a mess. The Americanas event, I believe can be like a one-off 'cause it was like a very singular event. We didn't have any impact like the banks in the credit book because our credit book of BRL 17 billion at the end of last year, zero exposure to Americanas. 90% of that credit book is collateralized, we are in a different situation here. We do have a market-making book in fixed income that, of course, the ventures and bonds of Americanas were traded, and we had an exposure there. We could not recognize in the first quarter because it was not a credit that you can have NPL there and recognize. It was recognized in January this year with the mark-to-market proceeds of the tradable part of the book. To give you the impact, because that's gonna... It's gonna be, I believe, It's fair to consider a one-off. It's gonna impact the first quarter, the amount is close to 125 total, 100%, BRL 125 million in the bottom line. Are you clear of this risk, Bruno? Is it fully done? Yeah, basically clear. Yeah. Our market-making activity, we don't have big exposures to one single name, right? it's basically a function of what the clients buy and sell, and we do have many different names. Americanas, unfortunately was one of them. it's 100% recognized in January. you're gonna see that in the first quarter, that's it. Super clear. Wonderful. Thank you, André. Thank you, Bruno. Thank you. Thank you, Domingos. Okay, next, Neha from HSBC. Let me see if she's in. Hi, Neha. Hi, Neha. I think you are on mute, if you can hear us. Let's try. We can come back to Neha. I'm bringing Tito from Goldman Sachs. Hi, Tito. You guys can hear me now? Hi, Tito. Yeah. Hey, Bruno. Hey, André. Thanks for the call. We hear and can see you. Okay, great. Thank you. Thanks for the call. You know, thanks for the guidance and the color. That's helpful. Maybe just on the revenues, you know, you mentioned challenging quarter. 1Q is gonna be a bit challenging. Help us think about sort of the long-term growth potential on the revenue side. You know, one, what do you think needs to happen? Is it, you know, just a better macro environment, interest rates coming down? I know there's a lot of moving parts in there, but just to try to think about that. Yeah, I'll go back a little bit. Yeah, at the end of 2021, your Investor Day, you guided, you know, $10 billion in revenues from new verticals. You know, that would be 25% of revenues, like BRL 40 billion in 2025, which is only two years away. I mean, I think we can reset those expectations, I imagine. Just help us think about revenue growth from here, downside risks and upside risks, as much as you can, will be helpful. Yeah. Sure. I think that I will separate my answer here in two parts, Tito. Let's look at these tough environments for investments with high interest rates and assume we're gonna be in this environment for longer. All right? If that is the case, the equity part of the business is going to continue to suffer from the macro environment. What we have as an ecosystem, two positive things that will benefit from it no matter what. Number one, I already talked about the new verticals. If you look at BRL 1.3 billion, 50%-60% of growth this year, we are confident that we can deliver that, and it's not correlated with investments. We are talking about BRL 700 million-BRL 800 million of additional revenue this year. All right? Number two, when I think about the funds platform, we have the largest funds platform, open funds platform in the market, I think about the fixed income business, both of them, they should grow what? At Selic rate, which is 13.75%. We're talking about mid-double digits here. It's important to have that in mind. The client assets, because of the shift that we already had in terms of movement, the fourth quarter, it was the first quarter where fixed income client assets was greater than equities in our breakdown. What I'm trying to say here is the impact can continue to happen, yes. A lot has been done already. The fixed income part and the funds platform should grow at Selic rates. That component also will help revenue growth. When I think about a longer term perspective for revenue, you know, to really play this operating average and the exponential growth again, we would need the market upturn again. The reverse of the tightening cycle. We don't need anything close to what we had in the last financial deepening process in Brazil of interest rates at 2%, not at all. Actually, it's not even good for XP when we are at 2%. It's not sustainable. I think that low single digits lower than double digits interest rates is more than enough. It's a psychological effect. If you have 9% is one thing, if you have 10% is another thing. This is important. We believe that we are gonna get there. We don't know when. It depends on macro policy. We believe it's cyclical, right? When that happens, the point I tried to make during the presentation is, look, our business still has a very strong operating leverage. We are growing and we are expanding, not only the sales force, but we are complementing the services and products that we can offer to our clients through our ecosystem. Our ecosystem is not only becoming more resilient, but bigger. When we have the reverse of the cycle, and with this transformation and the adjust in the cost structure with a much leaner cost structure, this operating leverage that our business still have, it's gonna play an important role. I don't know when it's gonna happen, but it will at some point in time. That's what I'm saying. The growth of revenue, that's how I would put it. Selic rate for funds platform and fixed income part, floats, same thing, and new verticals growing exponentially. The equity part already, you know, in a very low base should stay like that if the scenario is a conservative one in terms of higher interest rates for longer. Yeah, great. That's very helpful, Bruno. Thanks for the color on that. One follow-up, if I may. I guess just on, you know, why you're confident that, you know, the cost cutting won't impact the revenues, and particularly as some headcount reductions. I mean, do you think you overhired? When the cycle comes back, will you need to hire again? Is there no impact from that? No, we overhired. I think we overhired, right? That's one part of the explanation. Again, when I look at what happened in, we doubled our net income in three consecutive years. we were doing too much, too fast at the same time. it's really hard, you know, to stop the train. we did that in a pandemic. we start in 2020... we hired 1.2 thousand employees in 2020, in the pandemic. 2.5 thousand in 2021 working from home. of course it's hard to manage that, and of course we have overhired. I have no doubt about it. that's one part of the explanation. I think the most important than that, because that's easy to correct now. It's done already, okay? The other part of the cost reduction, in my view, it's more important, is the transformation. It give us a structural competitive advantage in terms of the way we are organized and our agility. We are not lacking anything. We are not giving up anything. We have already invested, right? We have the bank working, the digital accounts. We have our insurance company working. We have our international accounts working. We have XTAGE working. We have the corporate business working. We have our internal advisors already hired. Now it's time to consolidate everything that we have done, and through the transformation with a leaner cost structure. It's not about letting anything go. It's about not doing anything new. On the other hand, you know, consolidating and taking the opportunity of the cross-sell of everything we have done. Yeah. Okay. No, that's clear. Thanks a lot, Bruno. Thank you, Tito. I'm bringing Marcelo from Credit Suisse. Hi, Telles. Can you hear us? Yes, I can. Hi, André. Hi, Bruno. Hi, Telles. Thanks for your time. I have two questions. I think the first one is more strategic. Question. I mean, we've seen XP, you know, having a very successful, you know, business model, you know, in previous years. There was certainly, you know, very strong growth in a scenario where interest rates were abnormally low, and where I think the XP had indeed a winning value proposition, right? For the customer, especially vis-a-vis than what was being offered by the banks at the time. There's a lot of growth. You know, the relationship with the IFAs, you know, was easy, right? The relationship with the internal stakeholders, you know, was probably easier, right? When there's more money, it's always easier in that, you know, in that respect. Now we are in an environment where, you know, interest rates are double digit. We can argue whether they're gonna be 14, 15, or 10, but they're definitely not going back the 2% they had before. You have an environment where the IFAs, many of them are struggling in this environment. In an environment where you may not have that same winning value proposition that you had before, 'cause now, I mean, banks, you know, are fighting back, right? They have products that you don't have, right? As you mentioned earlier, some, you know, investors are looking for lower risk, you know, type of instruments, which, you know, at times, you know, puts the, you know, the large banks at an advantage. Now you have a large bank, you know, large banks also willing to replicate a bit your model, right? Of having, you know, offices, you know, throughout different countries and, you know, try to bring that entrepreneurial spirit to them, something that you guys did very well over the years. When I hear you know, your, you know, you talk a lot about, you know, now it's time... Let's reduce costs, which I think is something that you have to do, you know, for sure in that, you know, in that environment, you know, to adequate to a new level of revenues. You only talk a lot about the internal transformation of the of XP and the need to reduce costs, which I agree, I think that's important. But I think, what worries me, you know, is that I didn't hear much about if there's a need for a change in the strategy, you know, from XP in terms, you know, of, you know. This is a new environment, so how are you gonna approach, you know, the, your relationship with IFA? There seems to be, from what we see, we talk, there's a lot more attrition today with the, with the IFAs, you know, than before. We see a consolidation, you know, within the IFAs, you know, that their bargaining power only increases over, you know, over time. When things are harder, the smaller IFA, you know, needs to attach themselves to a bigger IFA. That ends up, you know, create attrition in the relationship or maybe forcing XP to have to spend more money, right? To retain them, either through, you know, key money or buying direct stakes. What is the strategy and, you know, of XP? That's my question. Is there any broader strategy in that respect? One question attached to that is, how do you think about this conflict of interest that exists, you know, between the IFAs and the clients? You know, the model that was a winning model back then. You know, nowadays, it creates a lot of conflicts at the end of the day. Sometimes it's not in the best interest of the client. What is XP thinking strategically to address those issues? Thank you. Telles, you made a lot of expressions and assumptions there. I will try. Yeah. to address the concept, and please let me know if I do it. I mean, I think there is a narrative there that don't necessarily agree with that. I think it's simpler than that. XP is evolving in the business, in the investment business. It's not that. Of course there is competition and so on, that's not the point. The point is a very tough macro environment that makes the investment business to suffer because, as I said, people, there is a higher inertia in moving money when you have very high interest rates, your money just investing in fixed income is more than fine. When you look at the KPIs that I mentioned, the main KPIs for the investment business, we advanced last year. With all of that competition, uh, with, uh, uh, um, uh, interest rates going from, uh, less than ten percent to thirteen point seven five percent, uh, we added two thousand new IFAs. We, uh, added net inflows of one hundred and fifty-five billion, uh, and we added new clients, four hundred and six thousand new clients. If you look at our, uh, market share in two thousand... In the investment, the way we see it, in the investment business, in two thousand and nineteen, seven point three percent. In twenty twenty, eight point six. In twenty twenty-one, ten point one. November, the last data that we have last year, eleven percent. We're gaining market share. The pace of it is reducing because of high interest rates. It's not because of competition. I'm confident that whenever, you know, the cycle change, XP is gonna be, you know, the main destiny from clients to come here because we have a sales force trained in a different way to serve clients in terms of investments. Not other reason, we've been elected in four consecutive years as the top of mind platform for investments in Brazil. I think it has to do much more with the macro environment than a structural thing. I don't think there is, honestly, and we keep evolving. The attritions that you mentioned about the IFAs, I don't know what attrition you're talking about. IFA, we have more than 12,000 IFAs in our network. In the past, we used to have less than 1,000. We communicate with all of them on a daily basis. If I would, you know, show you all the complaints, we would stay here, you know, for the home runs. We like that because that's exactly what makes us better to listen and to serve. That's how we are gonna get better. That's what XP has been doing for more than 20 years. The conflicts that you mentioned, we always tell the IFAs and internal advisors, "Look, we have to do the best for the client, period." If you don't do that. Of course you have to make money, and the client needs to understand that, but it has to be a win-win situation. If you don't do that, you're not gonna be a successful entrepreneur, period. Our IFAs, they have a very high score in terms of NPS. Honestly, I mean, I think that our strategy, at least for me, is pretty clear. Is go beyond investments to be dominant in investments because we are not yet. We have a very, I would say, interesting asset, which is our client base. Our client base of 4 million clients, it's the clients that has money to invest. That's really good, right? We need to focus on those clients, serve them better, and to go beyond the investment means that, as I said, they have already trusted us with the part of their life that it's one of the most important, their savings. We need to take very good care of it, serve them well, convince them to try other products, other things. That's exactly what's gonna expand our addressable market, increase the moat of our ecosystem and the LTV of our clients. Then we can bring a win-win situation again with that client throughout the period. I mean, I don't think there is something here in terms of the strategy that needs to change, honestly. Thanks, Bruno. If you allow me just to go, one, my second question, the cash flow. I couldn't find the manager cash flow statement in your press release. I don't know the reason why it wasn't there, but, you know. I just don't understand. I saw there was a reduction in the net assets of about BRL 459 million quarter-over-quarter, but because you guys didn't publish the. Mm-hmm. the cash flow statement, I don't know if that was because of share buyback or, you know, or payments to IFAs. If you could explain to us what drove that cash burn, that would be great. Thank you. No, no, sure, Telles. Yeah. The share buyback, you brought an important point that I didn't mention. We have bought throughout the year BRL 1.8 billion in share buyback approximately. We have now in treasury more than 3.5%, I guess, from total capital nowadays. Most of it was in the fourth quarter, because remember that in the fourth quarter, on top of the share buyback program, we had the Itaúsa block that was more than BRL 550 million, something like that. In the fourth quarter, we have bought BRL 1.3 billion approximately in total, right? That's probably what you saw there. We can go in details later because I don't have it here in front of me, but that's probably the share buyback program. That continues, right? We have been in January, it ends in May. Did you pay anything to the IFAs in this quarter? This quarter... It's gonna be minor. Yes. Yeah. Yes. It's gonna be minor. We have this. Similar base. Yeah. of recent quarters. Remember, Telles, that we have, with all the long-term agreements that we have done with the IFAs, we have some variable components of it, linked to performance, right? If achieves, we pay. If doesn't, we don't. Depending on. It's a case by case. Thank you. Appreciate your time. No, thank you, Telles. Thank you, Telles. Okay. Last one in line. Thiago Batista from UBS. There he is. Hi, Thiago. Can you hear us? Hi, Thiago. we cannot hear you. I don't know. You doesn't seem on mute, but... Now? Oh, yeah, now, perfect. Okay. Sorry, guys. Hi, Bruno. Hi, André. I have two questions, one actually a follow-up. The follow-up about the guidance, only to be sure. The implied top line growth of the guidance, in my calculation is a low single digit. Is this the case? The top line should expand in 2023 at single digit. The second one about the impact of the higher interest rates in your working capital. I believe we have not seen yet the full impact of the highest rate in your working capital. If it's possible to see this line expanding in 2023. The top line, next time we should give the P&L because you do the backwards calculation to guess the top line. Okay. Look, the guidance that we gave, we are not giving top line guidance, right? To your point, can we achieve the net income guidance with high single digit or low double digit revenue growth? Yes, we believe we can. That's it's a, it's an approach that we factor in, especially considering that the first quarter, it's probably gonna be tough considering the Americanas event and what happened with capital markets. We were conservative in the assumptions to bring this guidance, right? It's not a top line guide. Regarding the tax, we do have that in the cash flow working capital variation here. I don't know exactly, you know, what you're missing there, Thiago. No, the point is the highest Selic rate tend to have a positive impact in your working capital after a while. If not wrong, you guys are investing part of the working capital in kind of fixed income securities. Mm-hmm. Probably we'll see, higher impact of this, in 2023, onwards. From the increase in tax? In your... Not tax. your... Go ahead. I'm, Bruno, Thiago is referring. I don't understand. ... to, interest on gross cash and interest. Oh ... on equity, for example, like... Yes, yes. Yes. Got it. Oh, the higher it's gonna- The working capital. Yeah. Okay, the working capital. Okay. Now I got it. It's gonna be higher. You're right. No. Okay. Do you have the magnitude of this increase? Of interest on gross cash? Yes. If not wrong, you guys invest part of this working capital in fixed income securities. Take a time. We've actually, you know, in a lot of different securities, yeah, it's fixed income. The point is we have not seen yet the full impact of the highest Selic rate in your working capital. It's true to say that. I don't know if you're talking about the other revenue. Other revenues, yes. You're talking about other revenues. Yeah, other revenues. Now I understood. Because we also have all the hedge of, you know, the floating, the net worth that we have offshore, and the corporate FTP that goes into other revenue as a reduction in some parts. We do have that benefit, but we also have, I would say, negative numbers that when you add it together probably is what explains a lower number than you expected. That's what I'm guessing here. We can go offline later so I can understand exactly what your math or calculation is, and we can help you with that for sure. No. Perfect. I can talk with you guys after. Thank you, Thiago. Okay, Thiago was the last one. Thank you everyone for your participation. Hope to see you all soon and touch bases. Bruno, any final remarks or goodbyes? No, no. Just thank you for being here with us in one more call. That's all. Thank you. Bye all. Thank you. Bye-bye.