XP Announces Layoff of 782 Employees Amid High Financial Instability

In Times of High Financial Market Instability, the Investment Platform XP Announced an 11% Reduction in Its Workforce in the First Quarter of 2023.

This represents a decrease of 782 employees, according to a report presented this Monday, the 15th. The measure was implemented due to the high interest rates that discouraged investor demand for higher-risk assets and put pressure on technology businesses.

XP ended March with 6,146 employees, down from 6,928 in December 2022. According to the company, one factor that contributed to the workforce reduction was increased efficiency through the digitalization of its operations.

Additionally, an excess of hiring that occurred during the pandemic was also cited among the reasons for the decrease in the number of workers. “XP Inc. demonstrated humility by recognizing some excesses committed during the pandemic, and agility with an execution capacity to realign its cost structure where it should be, as it should be in any owner-operated company,” said Bruno Constantino, partner and CFO of XP Inc.

XP’s CEO, Thiago Maffra, Highlighted That Macro Perspectives in Brazil Remain Challenging.

According to him, the investment platform has been facing a high-interest-rate environment similar to that observed in other global economies. Maffra added that cost restructuring is essential for XP to remain competitive and achieve its goals.

During the conference call held to discuss the results, Maffra stated that XP does not anticipate additional cuts to its workforce. However, the executive noted that the situation involving the judicial recovery of Americanas negatively impacted the capital markets and corporate credit, putting pressure on financial advisory activity, as many investors are keeping their resources in low-risk liquid products while awaiting an improvement in the scenario.

XP reported a net income of R$ 796 million in the first quarter of the year, representing a 7% decrease compared to the same period last year. Analysts expected, on average, a net income of R$ 800.8 million for the period, according to data from Refinitiv.

Meanwhile, the platform’s net inflow declined by 65%, totaling R$ 16 billion, while net revenue remained stable year-over-year, totaling R$ 31 billion. For Maffra, given the high level of market uncertainties, it is unlikely that the pace of capital inflows will return to the patterns seen in the recent past.