Nu Holdings Ltd. Reports Third Quarter 2024 Financial Results
SÃfO PAULO--(BUSINESS WIRE)--November 13, 2024--
Nu Holdings Ltd. (NYSE: NU) ("Nu" or the "Company"), one of the world's largest digital financial services platforms, released its Third Quarter financial results today. Financial results are expressed in U.S. dollars and are presented in accordance with International Financial Reporting Standards (IFRS). The full earnings release has been made available on the Company's Investor Relations website at www.investors.nu, as well as the details of the Earnings Conference Call Nu will hold today at 5:00 pm Eastern time/7:00 pm Brasilia time.
"Our third quarter 2024 underscores the strength of our business model, demonstrating top-line growth and sustained profitability. We reached $2.9 billion in revenue, driven by both customer acquisition -- now reaching 110 million globally -- and enhanced customer engagement through cross-selling and up-selling initiatives, alongside appealing product launches. This growth was accompanied by a virtually stable cost-to-serve and a record ROE of 30%, resulting in a more than doubling of net income to $553 million for the quarter (YoY FXN). Our expansion into Mexico and Colombia continues to generate impressive results, with nearly 9 million customers in Mexico and over 2 million in Colombia. As we make progress in our execution, we are preparing ourselves to consolidate Nu as the world's leading digital services platform, going beyond financial services," said David Vélez, founder and CEO of Nubank.
Q3'24 Results Snapshot
Below are the Q3'24 performance highlights of Nu Holdings Ltd.:
Operating Highlights:
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Customer growth: Nu added 5.2 million customers in Q3'24, reaching a
total of 109.7 million customers globally by September 30, 2024,
reflecting a 23% YoY increase. This growth further strengthens Nu's
position as one of the fastest-growing digital services platforms
worldwide, and one of the largest financial institutions in Latin America
by number of customers. In Brazil, Nu has already become the institution
with the largest number of active customers in credit operations.
--
Engagement and activity rates: Monthly Average Revenue per Active
Customer (ARPAC) stands at $11.0 in Q3'24, with more mature cohorts
already at $25. On an FX neutral basis1 it grew 2% sequentially and 25%
year-over-year, up from US$10.0 from one year ago. The monthly activity
rate2 had another sequential increase to 84%, up from 83% one year ago.
This represents the twelfth consecutive increase in activity rate,
underscoring our ability to consistently provide a compelling value
proposition to our customers.
--
Low-cost operating platform: Monthly Average Cost to Serve Per Active
Customer remained below the one dollar level at $0.7 per customer (or
$0.8 when adjusted by one-offs occurred in Q3'24), demonstrating the
strong operating leverage of the business model. The company's efficiency
ratio improved 60 basis points quarter-over-quarter, reaching 31.4% and
more than 300 basis points better than a year ago, and despite the
one-off expenses of US$48 million associated with the repositioning of
Nucoins.
--
Asset Quality: Our leading indicator, the 15-90 NPL ratio, declined
once again during the third quarter, dropping 10 basis points from last
quarter to 4.4%. 90+ NPLs increased by 20 basis points to 7.2%, also in
line with expectations. The 20 basis points increase this quarter
reflects the increase in the NPL 15-90 accumulated over prior periods,
since this indicator behaves as a stock rather than flow metric.
Financial Highlights:
--
Net & Adjusted Income: At a Holding level, Nu continued to drive
increasing profitability and posted a Net Income for Q3'24 of $553.4
million and an annualized ROE of 30%. Adjusted Net Income3 for Q3'24
reached $592.2 million with an annualized adjusted ROE of 33%. Nu is
achieving these strong levels of profitability and efficiency, despite
maintaining a considerable excess cash of $2.4 billion sitting at the
holding level and continuing to make substantial investments in future
products and geographic expansion, as the company sees tremendous
potential to continue building the largest consumer platform in Latin
America.
--
Revenue: Nu's revenues were up 56% year-over-year on FX neutral basis,
setting a new record at $2.9 billion. This showcases the company's unique
ability to consistently expand its active customer base while compounding
revenue growth and profitability.
--
Gross Profit: Nu's gross profit stands at $1.348 billion, marking a 67%
year-over-year growth, with a gross margin of 46% from 43% in Q3'23.
--
Liquidity: On September 30, 2024, Nu had an interest-earning portfolio
$(IEP)$ of $11.2 billion which rose 81% YoY FXN. The ramp up of the lending
portfolio, which expanded 97% year-over-year and 19% quarter-over-quarter
on an FX neutral basis, to US$5.7 billion, and credit card receivables,
which increased 33% year-over-year and 4% quarter-over-quarter, on an FX
neutral basis, to US$15.2 billion, were the main drivers of growth. Total
deposits increased to US$28.3 billion, up 60% year-over-year on FX
neutral terms, supported by robust expansion across all three
geographies.
--
Net interest income: increased 63% year-on-year. On a sequential basis,
NII expanded 4% quarter-over-quarter on FX neutral terms, to US$1.7
billion. The net interest margin $(NIM)$ compressed 140 base points
sequentially to 18.4% this quarter. Risk-Adjusted NIM compressed 90bp QoQ
to 10.1%, a slower pace compared to NIM as cost of risk improved 50bp
sequentially. Yet, Risk-Adjusted NIM expanded 110bp YoY, underscoring
once again the result of our focus on optimizing the lifetime value of
our customer relationship cohorts. The NIM compression in the quarter was
mainly driven by the combination of three factors. First, yields on the
credit card portfolio declined reflecting lower risk in products and
customer mix; Second, lending yields declined due to the increasing mix
of secured loans in the portfolio; and Third, funding costs were
pressured by the deposit ramp-up in Mexico and Colombia, in line with our
depo rates strategy in new geos.
Business highlights:
--
Performance and Growth in Brazil: In Brazil, the customer base reached
98.8 million by September 30, 2024, with an average of 1.1 million new
customers monthly, and recently the company celebrated the milestone of
surpassing 100 million customers in the country.
--
International Expansion: In Mexico, Nu's growth remained strong, with a
net add of 1.2 million new customers in the quarter, reaching a total of
8.9 million customers at quarter-end. The expansion validates the
strategy of increasing deposit yields in the country. In Colombia, Nu
surpassed 2 million customers, sustaining the positive momentum from the
launch of the Cuenta product.
Footnotes
(1) FX neutral measures were calculated to present what such measures in preceding periods/years would have been had exchange rates remained stable from these preceding periods/years until the date of the Company's more recent financial information.
(2) Activity rate is defined as monthly active customers divided by the total number of customers as of a specific date.
(3) Adjusted Net Income is a non-IFRS measure calculated using Net Income adjusted for expenses related to Nu's share-based compensation as well as the hedge accounting and tax effects related to these items, among others. For more information, please see "Non-IFRS Financial Measures and Reconciliations -- Adjusted Net Income Reconciliation".
CONFERENCE EARNINGS CALL DETAILS Nu will hold a Conference Earnings Call today at 5:00pm Eastern time/7:00pm Brasília time with simultaneous translation in Portuguese and English. To pre-register for this call, please click here. A replay of the webcast will be made available after the call on the Investor Relations page: click here. ------------------------------------------------------------------------------
Note on forward-looking statements and non-IFRS financial measures
This release speaks at the date hereof and the Company is under no obligation to update or keep current the information contained in this presentation. Any information expressed herein is subject to change without notice. Any market or other third-party data included in this presentation has been obtained by the Company from third-party sources. While the Company has compiled and extracted the market data, it can provide no assurances of the accuracy and completeness of such information and takes no responsibility for such data.
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