XP Inc. to Cancel Treasury Shares

Rhea-AI Summary

XP Inc. (Nasdaq: XP), a leading technology-driven platform providing low-fee financial products and services in Brazil, has announced the cancellation of 12,650,574 Class A shares held in treasury. This decision, approved by the Company's Board of Directors, represents 2.3% of the total shares. As a result of this cancellation, XP's total share count has decreased from 549,630,977 to 536,980,403.

Positive

• Reduction in outstanding shares, potentially increasing value per share
• Board of Directors' proactive approach to capital management

Negative

• None.

Insights

Financial Analyst

XP Inc.'s decision to cancel 12,650,574 Class A treasury shares, representing 2.3% of total shares, is a strategic move that warrants attention. This action reduces the total share count from 549,630,977 to 536,980,403, which could have several implications for investors:

• Earnings Per Share (EPS) Impact: By reducing the number of outstanding shares, XP Inc. may see an immediate boost to its EPS, as the same earnings will be divided among fewer shares. This could potentially make the stock more attractive to investors focused on EPS metrics.
• Shareholder Value: The cancellation of treasury shares can be seen as a positive signal, suggesting that the company believes its stock is undervalued. This move effectively increases each remaining shareholder's ownership stake in the company.
• Capital Allocation: The decision to cancel shares rather than hold them as treasury stock indicates that XP Inc. doesn't foresee using these shares for future acquisitions or employee compensation plans in the near term.
• Market Perception: This action may be perceived as a vote of confidence from management in the company's future prospects, potentially boosting investor sentiment.

However, it's important to note that while share cancellation can have positive short-term effects, it doesn't directly create value or improve the company's fundamental performance. Investors should continue to focus on XP Inc.'s operational results, growth strategies and market position in Brazil's competitive fintech landscape.

Market Research Analyst

XP Inc.'s decision to cancel treasury shares is intriguing when viewed through the lens of market dynamics and investor psychology. Here are some key points to consider:

• Market Signal: In the Brazilian financial services market, where XP Inc. operates as a leading technology-driven platform, this move could be interpreted as a signal of confidence. It may suggest that the company believes its growth potential and market value are not fully reflected in the current stock price.
• Competitive Positioning: As a provider of low-fee financial products, XP Inc. operates in a highly competitive space. The share cancellation could be part of a broader strategy to optimize its capital structure and enhance its market position against both traditional banks and emerging fintech competitors.
• Investor Perception: Retail investors, who are a significant part of XP Inc.'s customer base, may view this action favorably. It could be seen as aligning management's interests with those of shareholders, potentially boosting investor loyalty and attracting new retail investors to the platform.
• Nasdaq Listing Impact: As a Nasdaq-listed company, XP Inc.'s share cancellation may attract attention from international investors who view such actions as indicative of strong corporate governance and shareholder-friendly policies.

While the immediate market reaction to this news may be positive, it's important for investors to monitor how this fits into XP Inc.'s broader strategy for growth and market expansion in Brazil's evolving financial services landscape.

SÃO PAULO, Brazil--(BUSINESS WIRE)-- XP Inc. (Nasdaq: XP), a leading, technology-driven platform and a trusted provider of low-fee financial products and services in Brazil, announced today that the Company’s Board of Directors approved the cancellation of existing treasury Class A shares held by the Company.

The Company has cancelled in this date 12,650,574 Class A shares (2.3% of total shares). Total share count went from 549,630,977 to 536,980,403 after cancellation.

About XP

XP is a leading, technology-driven platform and a trusted provider of low-fee financial products and services in Brazil. XP’s mission is to disintermediate the legacy models of traditional financial institutions by:

• Educating new classes of investors;
• Democratizing access to a wider range of financial services;
• Developing new financial products and technology applications to empower clients; and
• Providing high-quality customer service and client experience in the industry in Brazil.

XP provides customers with two principal types of offerings, (i) financial advisory services for retail clients in Brazil, high-net-worth clients, international clients and corporate and institutional clients, and (ii) an open financial product platform providing access to over 800 investment products including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds (REITs) and others from XP, its partners and competitors.

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," “aim,” "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond XP Inc’s control. XP, Inc’s actual results could differ materially from those stated or implied in forward-looking statements due to several factors, including but not limited to: competition, change in clients, regulatory measures, a change the external forces among other factors.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730439505/en/

Investor Contact: ir@xpi.com.br

IR Website: investors.xpinc.com

Source: XP Inc.

FAQ

How many shares did XP Inc. cancel on the announced date?

XP Inc. cancelled 12,650,574 Class A shares on the announced date.

What percentage of XP Inc.'s total shares were cancelled?

The cancelled shares represented 2.3% of XP Inc.'s total shares.

What is XP Inc.'s new total share count after the cancellation?

After the cancellation, XP Inc.'s total share count decreased to 536,980,403.

Who approved the cancellation of XP Inc.'s treasury shares?

The cancellation of XP Inc.'s treasury shares was approved by the Company's Board of Directors.