What happened
Shares of the Brazilian digital bank Nu Holdings (NU -1.69%) rose 16.4% in August, according to data provided by S&P Global Market Intelligence, after the company reported earning results for the second quarter of the year.
So what
Nu in Q2 reported a very slight loss of $0.006 on record revenue of roughly $1.16 billion, which is up 230% year over year. The bank added another 5.7 million users in the quarter, bringing total users at the bank to a whopping 65.3 million.
"We had another very strong quarter, with growth and profitability in our core business. We registered record revenues and are making huge strides toward becoming a multiproduct and multi-country platform," Nu's founder and CEO David Velez said in a statement.
Velez also said the company's largest subsidiary, NuBrazil, which currently banks 36% of the Brazilian adult population, is now profitable and generated a $13 million profit in the first six months of 2022.
Nu also continued to grow monthly average revenue per active customer (ARPAC) across the bank to $7.80 in Q2 from $6.70 in the first quarter. In its most mature customer cohorts, however, Nu grew monthly ARPAC to $21.
Incumbent banks in Brazil can have monthly ARPACs of around $40. Velez doesn't ever expect Nu's to get that high because the bank's strategy centers around low-fee products, but he does think the bank's most mature cohorts still have upside in terms of monthly ARPAC.
Nu is also continuing to grow in other parts of Latin America such as Colombia and Mexico. At the end of Q2, Nu had issued 2.7 million credit cards in Mexico and almost 314,000 in Colombia.
Now what
Ultimately, I thought Nu had a good second quarter in terms of revenue growth and new customers. Monthly ARPAC also continues to march in the right direction, and Nu is also showing that it has a path to profitability despite continuing to invest in growth.
Nu is a huge disruptor in the Latin American banking market, and I think the company has a bright future, which is why I'm bullish on the stock.
