XP heads into its third-quarter report with a split personality. On its last call, management showed that profitability was climbing out of a market-stress trough, with adjusted pre-tax margin rising to 32% from 30% and corporate banking revenue more than doubling from a year earlier. Yet the retail engine that built the company, fixed income distribution, advisor-driven net new money and capital markets issuance, was running flat at best. This quarter tests whether the margin recovery can keep going when the largest revenue streams are not helping much.
The Street is looking for earnings of $0.53 per share on revenue of about $985.6 million. That would be solid growth of roughly 18% in profit and 15% in sales from the year-ago $0.45 and $855.6 million. Sequentially, though, the bar is modest. EPS would match last quarter's $0.53, and revenue would slip slightly from about $1.00 billion. Analysts are effectively assuming a holding pattern rather than further acceleration. The whisper number of $0.55 sits a touch above consensus. That suggests some quiet expectation of an upside surprise, but the gap is too small to call the bar demanding. Management reaffirmed rather than raised its full-year call for double-digit growth last quarter, so a clean beat could open the door to a more confident tone on the full year.
The swing factor is corporate. Management called the elevated derivatives, FX, energy and collateralized credit revenue a normal level and said it expected a strong third quarter. If corporate revenue holds or builds on the second-quarter step-up, that supports the view that XP has a second growth pillar that is less tied to retail investor behavior. A drop would suggest the surge was partly opportunistic, and the margin story would get thinner. Watch the mark-to-market line too. The drag fell to roughly R$100 million to R$160 million last quarter from more than R$300 million, and management said the fixed income pipeline was gradually recovering. Further normalization would let more of the corporate strength reach the bottom line.
On the retail side, the honest expectation is stabilization, not a rebound. About 70% of fixed income sales were going into low-margin daily-liquidity SELIC products, which pushed the take rate down to roughly 89 basis points, and management did not expect that mix to reverse soon. A take rate that stops falling would count as good news. Retail net new money near the R$20 billion soft target would keep the story intact, and a clear shortfall would raise questions about a flat advisor base of about 18,400. Fee-based penetration, around 26% of assets last quarter, and further recovery in client satisfaction scores are the best signs that the mix shift toward recurring revenue is offsetting transactional softness. Early commentary on the SME platform launched September 1 and the AI-driven digital retail offering slated to drive 2027 client growth will help show whether those are real catalysts or just slideware.
Sentiment has cooled noticeably, falling to barely positive from about 18% bullish ahead of the last report. The stock is down 3.6% since that release, slightly better than the S&P 500's 4.4% decline. At $15.14, shares sit well below the 200-day moving average near $19.13 and closer to the bottom of their post-earnings range than the top. The market has not rewarded the margin improvement, so expectations look muted.
That sets up a fairly clear question. If corporate banking delivers the strong quarter management promised and fee-based growth keeps cushioning a still-pressured retail franchise, the improving-margin narrative holds and low expectations could work in XP's favor. If corporate fades while take rates keep sliding, the recovery will look more like a temporary bounce. Management's outlook for the volatile election period will shape how the market reads the fourth quarter.