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XP Inc. (NASDAQ:XP)
Q4 2019 Earnings Call
Mar 17, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings. Welcome to the XP Inc. fourth-quarter 2019 earnings conference call. [Operator instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Carlos Lazar, head of investor relations. Mr. Lazar, you may begin.

Carlos Lazar -- Head of Investor Relations

Good afternoon, everyone, and welcome to XP's first earnings conference call for the quarter and year ended December 31, 2019. I'm Carlos Lazar, head of investor relations. Joining me today for the call are Guilherme Dias Benchimol, founder and CEO; Bruno Constantino, CFO; Gabriel Leal, head of our retail business; Karel Luketic, head of marketing and digital content; and Frederico Ferreira, our finance director. We will be available for today's Q&A session, and also, our fourth-quarter earnings release and presentation are available in our investor relations website.

I would like to remind that certain statements in this presentation and during the Q&A may relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these forward-looking statements. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our reports filed with SEC. Please refer to Slide No.

2, important disclosure of the presentation for a full disclaimer. Now I will turn the conference over to Guilherme Benchimol, who will deliver some opening remarks starting on Slide 5 of the presentation. Thank you.

Guilherme Benchimol -- Founder and Chief Executive Officer

Good afternoon. It's a great pleasure to present our results to the market for the first time as a public company. I would like to start this call with a message of optimism. I can affirm that XP will continue to transform the financial markets, improve people's life while delivering solid results.

That's because our long-term perspective on the business was reinforced by the IPO concluded in December. It was another important step in our history, aligned with our goals of capitalizing the business and connecting with the investment community. Besides that we recorded very solid operational and financial performance, achieving an asset under custody of BRL 409 billion and a net income of more than BRL 1 billion during the year of 2020. Although we recognize the importance of those results, they are small when compared to the overall Brazilian financial system that counts with almost BRL 500 billion in revenue.

Therefore, we are more confident than ever that this is only the beginning of our journey, with a massive and concentrated market in Brazil, providing significant opportunities going forward. The competitive environment remains mostly unchanged, with the five largest banks in Brazil holding about 90% of the investment assets. And combined with that, we have unprecedented low level of interest rates. Certainly, the topic of investments for Brazilians has become a priority as it's no longer enough to buy government bond or certificate of deposit from a large bank as in the past.

This trend represents an excellent opportunity for XP as investments and financial education are in our DNA. Of course, depending on the macroeconomic scenario, the product mix may differ, but a very important fact is that our company does not need to create new investors. But only convince Brazilians who already invest that investing in our platform is the best choice. In this sense, other very important initiative that we remain focused on is getting even closer to clients during this period of high market volatility.

For that, we are supported by our three brands, Investimentos, Rico and Clear, and an extensive state-of-the-art IFA network with 64,000 advisors, spread across more than 600 offices national wide. That continues to promote the best services and offer over 600 different types of investment products. We are also holding several events and publishing a large amount of digital content which will be, for sure, relevant to reinforce our competitive advantage and for the sustainability of our secure NPS. Additionally, one of our main near-term challenge is to bring to our clients a complete banking experience, to retain customers, by allowing them to fully consolidate their investments with XP, Inc., and cutting their links with commercial banks, where they have a checking account and portion of their investments.

And finally, we are well capitalized with BRL 7 billion in cash, open for many opportunities and prepared and close monitoring the current crisis and its potential effects in our company. We definitely see us stronger to face it and to continue implementing our strategies to deliver sustainable growth and returns to our shareholders. Our successful history is full of challenges and various crisis that we surpassed, thanks to our culture, big dream, open mind and entrepreneurial spirit; our partnership model; and our long-term alignment in a horizontal and meritocratic structure with the adequate targets and incentives. We truly believe that these are the steps that will maintain XP.

Inc. ahead of its competitors and once again, transform the impossible into possible. Now I'd like to hand the call over to Bruno to comment in detail on our operating and financial results. Thank you all.

Bruno Constantino -- Chief Financial Officer

Thanks, Guilherme. Good evening, everybody. Just if you notice any voice difference here, it's because we are apart because of this coronavirus crisis. So moving to Slide 7, we present the evolution of our main operating KPIs: assets under custody, active clients, and NPS.

All figures grew strongly in 2019, benefiting from the positive snowball effect generated through our brands and investments made to enhance our platform and UX experience. Our AUC reached BRL 409 billion in December 2019, expanding 17% versus third-quarter '19 and 103% year over year. The risk-on mode of the markets in the fourth-quarter '19 helped our AUC number, especially through the equity appreciation of our custody. It is important to highlight that without considering the market-to-market of our custody, we've kept a healthy pace of net inflows during the fourth quarter, with an average around BRL 11 billion per month.

Our second KPI, active clients expanded 91% year over year to BRL 1.7 million, reflecting solid performance across all our channels and three retail brands. Lastly, XP ended the year with an NPS of 73, highlighting the benefits of our self-reinforcing ecosystem for all our clients. We will address the potential impacts of the coronavirus crisis in our KPIs later during this call. On Slide 9, we show our gross revenue evolution and its breakdown across our businesses.

2019 total gross revenue was BRL 5.5 billion, a 72% year-over-year increase. The growth in the fourth-quarter '19 versus fourth-quarter '18 was even higher, increasing 90% year over year from BRL 957 million in fourth-quarter '18 to BRL 1.8 billion in fourth-quarter '19. The main drivers were, number one, mutual funds, especially performance fees in retail; number two, equities and futures in both retail and institutional businesses; and number three, a steep increase in issuer services revenue. In terms of revenue breakdown, retail remains our most relevant segment line, representing 67% of total revenue versus 73% in 2018, with the delta being mainly a function of the increase In issuer services from 5% to 9% of total revenue, reinforcing our diversified revenue profile and the benefits of our synergistic ecosystem.

Moving to Slide 10. We see that 2019 was another outstanding year for the retail business. Following the strong AUC growth and macro tailwinds retail revenue increased 56% year over year, reaching BRL 3.7 billion. In terms of asset classes, as already said in the previous slide, the main highlights were mutual funds through performance fees in equity and hedge funds, and equities and futures trading, which followed higher overall volumes in B3.

Looking at our retail Take Rate, there was a 20-bps contraction in 2019 versus 2018 from 1.4% to 1.2%. The decrease reflects, firstly, the zero-brokerage fee strategy at our brand, Clear, which is focused on power traders and was adopted in October 2018, therefore, impacting results more meaningfully throughout 2019. The second factor was the steep increase in AUC, which was caused by the stock market rally and large inflows in equities custody accounts without a corresponding growth in revenue. It is important to understand that concept when we think about AUC and Take Rate going forward.

When we compare the Take Rate of the last 12 months in third-quarter '19 with fourth-quarter '19, it has been stable at 1.2%. We do not expect material change in the Take Rate going forward, and we will talk more about it when we address the coronavirus crisis impact in our KPIs. On Slide 11, we present our institutional and issuer services revenue segment, which also posted strong results in 2019. Institutional revenue reached BRL 802 million in 2019.

This represents an increase of 66% versus 2018. The growth was mainly driven by an increase in volumes of our Brazilian trading desks following the expansion in B3 and increase in secured placement fees with fixed income being the main contributor. Our Institutional sales and corporate access teams have been very active in 2019 with more than 1,700 meetings organized during the year and successfully connecting institutional clients to executives, industry experts and politicians in Brazil. Additionally, it is important to highlight our efforts and investments to continually qualify our Institutional team and build strong long-term relationships with international clients.

It is worth noting, we recently added Fernando Ferreira as chief strategy and head of research coming from London, where he used to work for Merrill Lynch; and Fabio Frischer as head of equity sales in New York, also coming from Credit Suisse in New York. On issuer services, revenue totaled BRL 507 million in 2019. The growth relative to 2018 was 185%. The main highlights of the year were, in order of contribution, one, DCM, debt capital market, our main revenue stream, which is very recurring in nature and resilient through market cycles; two, REITs, offerings; and three, ECM, equity capital market.

Now moving to Slide 12. We show our digital content and other revenue. Digital content revenue reached BRL 112 million in 2019, up 108% year over year. The result was mainly driven by the increase in sales of online educational products through our XP Educação.

During the quarter, we also launched Spiti, a retail-focused independent research house that enhanced our high-quality content. We believe this revenue segment will continue to grow in 2020, but more importantly, it's a differentiated tool to connect us with our customers in times like the one we are living right now. More about that later in the presentation. Other revenue grew 180% in 2019 versus 2018 and total BRL 420 million.

This is mainly related to our market maker businesses and platform growth enabling our ecosystem to function well. Next, on Slide 13, we present our COGS and operating expenses analysis. COGS, which is mainly IFA commissions and clearinghouse fees reached BRL 1.6 billion in '19 versus BRL 491 million in '18, representing a 71% growth rate, just in line with our revenue growth. Gross margin expanded 50 basis points in 2019 to 68.7% basically due to product mix.

Moving to operating expenses. There was a 44% annual increase in 2019. As a percentage of net revenues, expenses decreased from 42% in 2018 to 35% in 2019, reflecting the benefit of our operating leverage. On Slide 14, we present adjusted net income, which reached BRL 1.1 billion in 2019, growing 119% from BRL 491 million in 2018.

Adjusted net margin expanded from 16.6% in '18 to 20.9% in '19, above the midpoint of our guidance of 18% to 22% range. In conclusion, 2019 posted strong numbers across all segments of our ecosystem. And I would like to reinforce our long-term commitment and goal of growing our businesses while maintaining a high level of profitability. Now I'm going to talk about our new businesses and the potential impact of the coronavirus in our number going forward.

Moving to Slide 16. Here, we present a road map for new businesses. Most of it is related to the concept of providing our investor customers a full-service platform, including banking services, such as a digital bank account, payments and debit and credit cards. So our clients can cut completely the link with incumbent banks, and we can grow our share of wallet.

Despite the crisis, we understand these initiatives create long-term value for XP, and we're moving forward as planned. But we know it is important to be flexible, agile, and evaluate the scenario as the crisis evolves. Regarding our debit and credit card initiatives, we are thrilled to announce our partnership with Visa as the issuer partner of our cards, which we plan to launch still this year. We found in Visa the best partner in the card segment, as they bring a plan of superior services with scale and a global acceptance footprint to all our customers.

We are confident that the combination of our investment and financial digital services with the new cards to be launched with Visa will further enhance the experience of our clients. Other highlights worth mentioning, and I already talked about it quickly, is the Spiti business run by Luciana Seabra, which is an independent provider of investment content, as I already said. Needed more than ever in times like this. Now we are going to talk about our view of potential impact of COVID-19 crisis in our business.

Moving forward to Slide 7. Here, we analyze the potential near-term impacts to our businesses related to the coronavirus crisis. It is important to highlight that these are management's opinion and not facts for sure. And we are in an early stage of this crisis in Brazil, so it's hard to make any forecast.

Having said that, in terms of assets under custody, the steep decline in the stock market, of course, negatively affects our equity position, but not necessarily the net inflow, and that's very important. We believe to be at a very early stage of this crisis, as I said. To conclude, if these positive net inflows are going to compensate or not for any drop down in the stock market regarding our AUC at the end of this year. Now moving to product mix on the up right on the slide.

If we compare with what happened in past crisis, we should expect to see rising demand for fixed income products due to recent market sell-off. The difference nowadays, though, is the all-time low interest rates in Brazil, around 4% per year, and maybe going down even further. Our customers will have to invest in something, and we will be there to help them navigate through these hard times. When we talk about net inflows on the bottom of the left side of this slide, it is our expectation that it will keep a positive trend.

But again, it's hard to say if the pace of growth will diminish or not going forward. Up to now, we haven't seen any major change in our net inflows, except for few clients with large equity custody, but without necessarily causing any impact on revenue. For example, all the clients with more than BRL 1 billion of equity custody in our platform as of today represent, in aggregate, less than 10% of our total custody but generates less than 0.1% of total revenue, so this led us to the Take Rate. If the AUC suffer from redemptions from large equity positions that do not provide revenue, like the example I just gave, our Take Rate should go up just analyzing this factor.

If there is a shift in mix toward fixed income, which is possible, it will depend. Despite equities having, in general, a higher Take Rate than fixed income, the later has a much bigger market, lower churn and usually upfront fee payments. Again, under this uncertainty scenario we are facing, it's too early to tell how our Take Rate is going to behave in 2020. Although we understand this is a different crisis, just to try to give you some additional color, we highlighted in the next slide what happened in our KPIs in past crisis in Brazil.

Moving to Slide 18. We depicted here three episodes in Brazil: 2014 elections, Joesley Day in 2017, and the Truckers' Strike in 2018. In all of them, despite the drop in the equity market, our AUC and net inflow performed well. As any portfolio manager understands, of course, I do not have to say that past performance is not a guarantee of future performance.

But I guess the point I'm trying to make here is the phone. Number one, we need to be nimble, agile, adaptable and learn quickly from the crisis. Number two, our business tends to be less affected by the crisis than other businesses. Since it is largely digital and less dependent on logistics.

Number three, we still see massive long-term opportunity in front of us. Again, with 90% of the BRL 8.6 trillion addressable market is still concentrated mainly in five banks. And number four, the competitive environment remains unchanged. We believe our platform is positioned better than ever to overcome this crisis, and we have the opportunity, one more time, to differentiate ourselves from the incumbents.

Remember, we are focused on investments with a unique IFA network close to our customers. That is a huge difference in our view, especially in times like this. Moving to Slide 19. You can see, as Guilherme presented in the beginning, XP's strong cash position, especially after the IPO and our extended debt maturity, we have more than BRL 7 billion in cash and only BRL 0.4 billion of debt maturing in 2020.

From a cash point of view, we are in a comfortable position and situation to navigate through the crisis. Regarding our risk metrics, we follow daily our VaR and stress test among other metrics, and both have behaved well despite increasing volatility. We do hedge our position to protect our book of flows as market makers. And just to give you a sense, as of yesterday, our VaR one-day, 95% of confidence, representing 0.08% of our net worth and our stress test represented 0.79% of our net worth, all well below the targets we have established in our company.

Now let's move to my last slide and talk about some opportunities, so we understand this crisis bring to us as any other crisis. So in Slide 20, it is our belief that every crisis is an opportunity to get closer to customers, and that is exactly what we have been doing. In this context, we benefit from our financial education DNA and digital content platform. Since the outbreak of the coronavirus crisis, our strategies, research analysts and digital influencers have intensified the publishing of reports and broadcasting of videos.

We have been increasing the touch point with our clients. To date, more than 30 reports and lives were posted about the crisis, with more than 600,000 views. We also published daily market open and close live videos and post using not only the main social media channels but also our proprietary investment portal InfoMoney, our own TV network, and XP Educação. As shown in the charts on the right, the number of interactions and views increased sharply this month, reflecting our communication efforts.

Through the first half of March, we already had nearly the same level of traffic on our research platform as in the entire month of February. InfoMoney's traffic also remains high, with more than 5 million visitors through March 13. Again, education is in our DNA, and we believe information is key during periods like the one we are going through right now. Lastly, as Guilherme mentioned, the total addressable market remains huge.

Our partnership keeps focused on the long term. We believe the company is stronger than ever to go through the crisis, and if necessary, we will adapt quickly. On behalf of XP, I would like to thank you all for your interest, and now we will open the call for the Q&A session. Thank you very much.

Questions & Answers:


Operator

Thank you. [Operator instructions] Our first question is from Tito Labarta, Goldman Sachs. Please proceed with your question.

Tito Labarta -- Goldman Sachs -- Analyst

Hi. Good evening everyone. Thank you for the call and the video presentation. I've got a couple of questions, if you can help.

I guess first on your AUC, and I understand it's difficult to predict in terms of market movement, the impact. But just trying to get a sense, if we look in the fourth quarter, IBOVESPA was up around 11%. I estimate that market appreciation benefited your AUC roughly 7%. So I don't know in terms of maybe the asset mix or just trying to understand how the market movement could potentially impact your AUC? Like if the market post 10%, how sensitive will your AUC be to that? And I understand it's not just equity but other products you have under AUC, so if you can maybe help us to understand a little bit from that perspective.

And then my second question, Bruno, you mentioned that you do think that Take Rate could remain -- you don't expect material changes in the Take Rate. I understand on quarterly basis and given the current market scenario, it's very difficult to predict, but during IPO, you were saying that the Take Rate could fall maybe closer to 1%. So do you think in longer-term perspective, this 1.2 that we saw this quarter, you do think that's sustainable now? Did something change? Earlier, you were saying it could be closer to 1%. Just to understand how you think about that from a longer-term perspective, removing some of the short-term volatility.

Thank you.

Bruno Constantino -- Chief Financial Officer

OK. Tito, thanks for the questions. So going to question No. 1, the AUC.

As we said during the IPO, basically, we have three main parts of breakdown in the AUC: equities, fixed income and funds. And in funds, we have all kind of funds in that third part. And I mean, it varies from time to time, but you can assume that those three are the main parts. Of course, with the market drop-down, the equity part and a less smaller part of the funds, they tend to go down as well in terms of AUC.

But as I said in the call, in the presentation, not necessarily this drop-down will have an impact in revenue, especially if we are talking about a portion of the equity AUC that does not contribute in a relevant way to retail revenues. We are one of the main players in the stock loan market, so we do have a large portion of equity cut in the market and that large portion does not necessarily bring Retail revenues. So that's why it's hard to forecast the Take Rate. Going to your second question, because it's a function of retail revenues divided by, of course, the AUC and maybe if the AUC goes down, losing part of the custody that does not contribute to the revenue, then the Take Rate should go up by this fact isolated, as I said, in the presentation.

Going to the 1.2 going down to 1% or higher than 1.2? It's the same thing that we told you during the IPO. It's hard to forecast. We believe that there is not a price pressure in terms of the funds and everything else in the market, considering that we already have, I said, for example, a zero-brokerage fee for equities at Clear, one of our brands. So we don't see that.

It's going to be more a function of the type of revenue that comes in and how the AUC behaves regarding the market price of all the securities that we have in our AUC. So that's basically it. I'm sorry, I don't know if I answered your question, but it's really hard to forecast those two variables. But I wouldn't expect the retail revenue -- let me put in a different way.

I wouldn't expect the retail revenue being impacted in a strong way because of a reduction of AUC because of market price.

Tito Labarta -- Goldman Sachs -- Analyst

That is very helpful, and I understand the difficulty in forecasting it. Maybe just one follow-up, though. So moving on to then the institutional revenues, we also saw a big increase there. Maybe if you can help us put those into perspective also in terms of market movements.

Like how sensitive would that be to the movements in the market? And we saw like BRL 300 million this quarter, up from BRL 173 million last quarter. So how much of that benefited from the market? And conversely, how much could it be impacted in a negative scenario?

Bruno Constantino -- Chief Financial Officer

OK. Yeah. Basically, the market appreciation that we had in fourth quarter represented roughly more than 40% of the AUC growth, so it's not that you take the BRL 409 billion of assets under custody as of December. And you take out the BRL 350 billion as of September '19, and it's not BRL 20 billion per month.

As I said, the pace is closer to BRL 10 billion to BRL 11 billion of net new money per month, and the rest is market appreciation. What I can tell you is the following. We don't know how it's going to be going forward because of the crisis, but up to now, we haven't seen any major impact in the net new money coming in. So far, our platform has been healthy, just as last year in terms of net new money.

Having said that, we might have some, as I said, some equity custody withdraw but not necessarily with an impact in retail revenues.

Tito Labarta -- Goldman Sachs -- Analyst

Thanks. Sorry, I don't think that was my exact question, though. I was asking more on the institutional revenues. Like we saw a big increase there.

It was over BRL 300 million this quarter, compared to BRL 173 million last quarter. So I just wanted to understand the Institutional revenues in the context of the market movement.

Bruno Constantino -- Chief Financial Officer

OK. Sorry about that. I missed the beginning of the question. Yes, the Institutional part, it's basically a function of volume in the market.

So as you know, as I said, we are investing outside Brazil. I mentioned the hiring of another partner, Fabio Frischer, that came to join us. Also in the Brazilian market, with our institutional sales services, we are one of the main players in the market as well, so the increase in volume helped that. We have basically a little bit more than 60% of institutional revenue coming from Brazil, a little bit less than 40% from outside.

But both markets performed really well in 2019. It's a function of volume, basically.

Tito Labarta -- Goldman Sachs -- Analyst

OK. Thanks a lot. 

Operator

Our next question is from Mariana Taddeo, UBS. Please proceed with your question.

Mariana Taddeo -- UBS -- Analyst

Thank you for the...

Bruno Constantino -- Chief Financial Officer

Mariana? 

Operator

Your line is now live. If the line is muted on your end, you would need to unmute it. Our next question is from Marcelo Telles, Credit Suisse. Please proceed with your question.

Marcelo Telles -- Credit Suisse -- Analyst

Hello. Hello, everyone. Thanks for further disclosure regarding the coronavirus impact. That's very helpful in your presentation.

I have a couple of questions. The first one, can you tell us, I mean, how much of your revenues were related to performance fees on your asset management platform, including both your own and third-party funds? And how do you think that should play out in 2020? Could that be a detractor to your revenue yield? And my other question is regarding the growth in the AUC. I know you touched those points in your presentation. The market is down close to 40%.

In terms of revenue, it is close to 30% of your retail revenues at least. I know you mentioned there's a big portion for equity, a part doesn't really generate a lot of revenue. But how do you reconcile that, the fact that the -- your brokerage side represents close to 30% of your retail revenues, and given the decline that you've seen in the market, I mean, should we expect, perhaps, a bigger impact on your revenue stream, not only AUC but on the revenues as well? Thank you. 

Bruno Constantino -- Chief Financial Officer

OK. Marcelo, thank you. The first question about the performance fee, yes, it played an important role in the fourth quarter of '19. We do not disclose exactly the number.

But as you know, there is this seasonality in our business regarding the performance fees that are charged on the middle of the year in June and in December. And because of the market appreciation we had last year, the performance fee was relevant in that sense. Going forward, of course, looking at the market right now with the picture that we have, the performance fee would diminish significantly. We don't know how it's going to be in June, neither in December.

But having said that, I mean, the business has other ways to compensate itself. That's the beauty of our self-reinforcing ecosystem in our business. They are all interconnected somehow. And because we are focused on investments, the important thing to bear in mind is people will have to invest in something, right? So either a government bond or equity funds or directly in equities or fixed income secured or REITs, but they will have to invest in something.

And it's a function of the price of the secured and the frequency of the trading and the investments made in our platform. So up to now, this year, when the crisis started, what we noticed is the following. The price, of course, it's down. As you said, the stock markets around 40% down from last year, but the frequency has been very high compared to last year.

So it's early to tell how it's going to behave looking forward. We could have a short-term impact. Of course, we are not immune to crisis. I think nobody or almost nobody is.

But what we try to give a sense here is more a long-term view. We believe, I mean, as any crisis, this one is going to pass. We cannot predict that how long it's going to last, but it's going to pass. And not necessarily the impact is going to be as hard as some might think, looking at the drop in the stock market because as I said, this ecosystem that we have in our business model can compensate itself somehow.

And your second question about the AUC and the impact of the equity, I mean, I think I kind of answered that, because of the equity, as I said, the equity going down -- the AUC of equity going down. If this part that goes down or leave the platform is not related to the revenue, then the Take Rate will go up and not necessarily we're going to lose revenue because of that. But of course, at a lower price in the market for too long, without frequency of tradings and so forth in the equity part, you can have an impact there. But then you compensate in other parts of the business because people, again, will have to invest in something, right?

Marcelo Telles -- Credit Suisse -- Analyst

That's very helpful. If you allow me just one extra question. Regarding your technology, your IT systems, during this time of volatility in the market, it seems that XP, according to the press, had experienced a lot of -- or several issues in terms of Spiti. That people are not being able to trade or maybe things taking slower in the platform.

We've heard that from some IFAs as well. How do you feel about the current state of priority platform? Do you think you may have to invest more to be able to just solve some of these bottlenecks down the road? I'm interested to hear your thoughts there.

Bruno Constantino -- Chief Financial Officer

OK, great. So yeah, the platform, what I can tell you is that the platform is working just fine. We have an IT team all over it. But just bear in mind that XP is by far the leader of the market, right? So if we talk about retail, in BOVESPA, in equities, we have around 50% of market share.

If we go to futures, that number goes up to 60%. So we have the volume of the market. Now imagine that increasing by a number of 5, for example, people trying to log in at the same time. Of course, you can have one or other problem in terms of intermittence in the platform.

But all of that that we had on the Wednesday when Brazil stayed closed for two and a half days, and the market was melting down outside Brazil. And when it opened, everybody just jumped in at the same time, so it's normal. In any place, you're going to have some kind of -- some people will have a problem, but we kept our market share stable through all times. And nowadays, I mean, the platform is working just fine.

We don't have a problem in terms of the platform, and you can check. I mean, the best way that I recommend you to check that is just go and look at the market share in all kinds of markets that we trade in Brazil.

Marcelo Telles -- Credit Suisse -- Analyst

Thank you very much.

Operator

[Operator instructions] Our next question is from Mariana Taddeo, UBS. Please proceed with your question.

Mariana Taddeo -- UBS -- Analyst

Nice. Sorry, lost the connection before. I have a question, you mentioned earlier that on inflows you are not seeing a major impact from coronavirus. I want to understand a little bit better in terms of product mix, if you've already seen some changes and in case of redemptions, not only from the mutual fund but also from maybe the pension products.

Thank you.

Bruno Constantino -- Chief Financial Officer

OK. Thank you, Mariana. Yeah, the inflows, as I said, I mean, so far, it's been business as usual. We have in our DNA the education business, right, the financial education business.

And in times like this, this is more important than ever for all the Brazilians. One other point to make here is that different than other crises that we have, and each crisis is somehow unique in itself, and this one is a different one for everybody all over the world. But one thing in Brazil that is different than other crises is the level of interest rates that we have. So Brazil, we're going to know it's more, but probably interest rates are going to be below 4%.

We never had that. In 2008, when we had the subprime crisis, I believe the interest rates were above 14%, something like that. So it's no-brain decision to go to fixed income and buy government bonds. Now, it is a different situation.

Of course, there is a lot of volatility in the market that can impact net inflows, and decision from investors how to invest. But one thing we are very confident about that our platform keeps providing a better value proposition for the clients. And as I said in the presentation, in times like this, we step in. We go after our clients.

We expose ourselves with our financial education DNA exactly in times of uncertainty, what people need is information, and we have that to provide them. So I believe that looking in a short-term view and most importantly, in a long-term view, we'll position XP as a player in the market that really is there to help the client for the long term. And that, of course, helps the net inflow as well. So it's hard to tell looking forward because, again, nobody knows what's going to happen with this crisis.

But so far, what I can tell is based on what we have seen on a daily basis. So far, the net inflows, they've been keeping the same pace, except for some large equity custodies. And I made this point just so everybody can be aware that we might have a drop in assets under custody because of this, some small clients, few clients, I mean, with large equity custodies, but that does not mean that will impact our revenue because those large custody, they not necessarily contribute to the revenue as other equities and fixed income in other custodies that we have in our platform.

Mariana Taddeo -- UBS -- Analyst

Thanks.

Operator

[Operator instructions] There are no further questions at this time, and I would like to pass the call back over to Carlos Lazar for closing comments.

Carlos Lazar -- Head of Investor Relations

So once more, I would like to thank you all for participating in this conference call. For additional questions, please contact our investor relations department. Our email address is ir@xpi.com.br. Stay safe and have a good night.

Thank you.

Operator

[Operator signoff]

Duration: 54 minutes

Call participants:

Carlos Lazar -- Head of Investor Relations

Guilherme Benchimol -- Founder and Chief Executive Officer

Bruno Constantino -- Chief Financial Officer

Tito Labarta -- Goldman Sachs -- Analyst

Mariana Taddeo -- UBS -- Analyst

Marcelo Telles -- Credit Suisse -- Analyst

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