Nu Holdings Ltd. Q3 FY2024 earnings call

• Customer Acquisition: Added 5.2 million new customers, active users increased 24%, and monthly activity rate was 83.6% (12th consecutive quarter increase). - Revenue Expansion: Revenue $2.9B, up 56% YOY; ARPAC was around $11, with mature cohorts achieving $25 monthly ARPAC. - Profitability: Gross profit $1.3B, up 67% YOY; net income $553M, adjusted net income $592M, annualized ROE 30%. - Asset Quality: 15-90 NPL ratio 4.4%, 90+ NPL 7.2%; credit loss allowance expenses up 6% FX-neutral. - New Verticals: Launching telecom services, marketplace, travel, etc., to diversify the business model.

Nu Holdings reached 110 million customers by the end of the third quarter of 2024. Revenue surged to $2.9 billion, a 56% year-over-year increase. Gross profit was $1.3 billion, a 67% year-over-year growth with a gross margin of 45.8%. Net income was $553 million, and adjusted net income hit $592 million, up 89% year-over-year on an FX-neutral basis. In terms of deposits, total deposits were $28.3 billion, up 60% year-over-year on an FX-neutral basis. The consumer finance portfolio grew 47% year-over-year, with credit cards at $15.2 billion and lending at $5.7 billion, accounting for 27% of the total portfolio. Primary banking accounts were established with approximately 60% of the active customer base, and the average number of products per active customer was 4.

• Management expects NIM to improve as loan-to-deposit ratio increases. - Anticipate continued growth in customer base, cross-selling, and expansion in new geos like Mexico and Colombia. - Plan to resume growth in Pix financing if cohorts perform well. - Expect to optimize funding costs in Mexico and Colombia over time.

• FX fluctuations impacting financial results. - Macro environment affecting credit quality and provisioning. - Execution risks in entering new verticals like telecom and ensuring successful market penetration. - Credit risk associated with shifting loan mix towards more secure lending.

Q: About Nu's telecom business model, revenue model, unit economics.

A: David Vélez discussed entering telecom space to improve consumer experience, synergies with existing customer base, and potential diversification of revenue streams.

Q: Concern about risk-adjusted NIM decline.

A: Guilherme Lago explained mix of factors like funding costs, yield changes, but expected NIM to improve as loan-to-deposit ratio increases.

Q: Credit card purchase volume and market share.

A: Guilherme Lago noted FX adjustments show growth, continued market share gain in Brazil.