XP 1Q26 Results Confirm Bear Case: Take-Rate Falls Below 1.20%, Net Inflows Plunge

What happened

XP's 1Q26 earnings revealed a sharp deterioration in core retail monetization and client activity, with the annualized retail take-rate dropping to 1.18% (down 7 bps YoY and QoQ) and total net inflows collapsing to R$14bn—less than half the prior-year quarter and well below the R$94bn FY2025 run-rate. The decline in take-rate, now beneath the critical 1.20% threshold, signals that fixed-income product mix and distribution pressures—including the Banco Master/FGC marketing controversy—are directly compressing revenue per asset. Net inflows are particularly weak, suggesting that the platform's ability to attract new money has been severely impaired, likely due to reputational headwinds and reduced advisor productivity. Total client assets still grew 15% YoY to R$1,529bn, but this was driven largely by market appreciation rather than organic gathering, masking the underlying flow weakness. The first-quarter results confirm the bear case laid out in the DeepValue master report, which assumed exactly such a scenario: retail take-rate below 1.20% and net inflows worsening.

Implication

The continued take-rate compression and net inflow collapse indicate that the retail monetization model is under severe stress, with the Banco Master episode likely accelerating client and advisor attrition. XP now trades at approximately 8.5x trailing P/E based on the 1Q26 annualized earnings run-rate, but the earnings power is declining as the revenue per client asset shrinks. The bear case in the DeepValue report ($13) becomes increasingly plausible if net inflows do not recover in the coming quarters, as the company will struggle to grow earnings without organic asset accumulation. Investors should await clarity on legal outcomes and a stabilization in take-rate above 1.20% before re-evaluating, as the current trend points to a structural de-rating. The 90-day checkpoint triggered: net inflows down YoY again and take-rate below 1.25%—thesis weakens materially; reduce exposure now.

Thesis delta

The 1Q26 results fundamentally shift the thesis from 'waiting for stabilization' to 'bear case unfolding.' Retail take-rate fell to 1.18%, now below the 1.20% threshold that would confirm structural monetization erosion, while net inflows of R$14bn are far below the FY2025 quarterly average of R$23.5bn, indicating a sharp deterioration in client engagement and new money generation. The probability of the bear scenario increases to at least 50%, and the implied value target of $13 becomes the base case until concrete evidence of a turnaround emerges.