Shares of the Brazilian digital bank Nu Holdings (NU -2.76%) traded more than 13% higher at 9:40 a.m. ET today before giving up those gains and trading about 1% higher as of 10:26 a.m. The company reported earnings results for the first quarter of 2022 last night.
In the first quarter of the year, Nu reported a loss of $45 million, roughly in line with analyst estimates. Adjusted net income came in at $10.1 million. Nu in the quarter also generated record revenue of $887 million, which smoked analyst estimates of only $624 million.
Nu added another 5.7 million customers in the quarter and is now close to 60 million customers at the bank. Nu currently banks roughly 33% of the adult population in Brazil and is also growing in Mexico and Colombia.
The bank also grew deposits by nearly $3 billion in the quarter and had a total of $12.6 billion of deposits at the end of Q1. Total loans grew $2.2 billion in the quarter and reached $8.8 billion of outstanding balances.
Importantly, Nu continued to grow average monthly revenue per active user (ARPAC), which increased to $6.70 on average and to $19 for some of the bank's most mature cohorts. Continuing to grow ARPAC will be critical if Nu is going to succeed.
I thought Nu generated a solid quarter. While investors will want to keep an eye on asset quality in the rising-interest-rate environment, Nu has tons of growth potential in Latin America as a fintech disruptor and continues to grow ARPAC, which, again, is very important.
Nu is a Warren Buffett and Berkshire Hathaway stock, and after a difficult start to the year, investors can now buy the stock at a lower valuation than Buffett did, so I think it's a good buy at these levels.