Nu Holdings (NU 0.60%), one of Latin America's fastest-growing fintech companies, has seen its stock rally more than 50% over the past 12 months. It impressed the market with its robust growth in customers, revenue, and earnings.
Should you buy Nu's stock before it posts its fourth-quarter earnings report in February? Let's review its business model, growth rates, and valuations to determine the answer.
Image source: Getty Images.
How rapidly is Nu growing?
Nu's NuBank is the largest digital-only direct bank in Latin America. Its three largest markets are Brazil, Mexico, and Colombia. By streamlining its banking services online and issuing no-fee credit cards, Nu expanded at a much faster rate than traditional brick-and-mortar banks.
To support that expansion, Nu launched more lending services, e-commerce services, and cryptocurrency trading tools. Between the end of 2021 and the third quarter of 2025, its number of customers more than doubled from 53.9 million to 127.0 million, while its activity rate (the proportion of active customers to total customers) increased from 76% to 83%.
Moreover, its average revenue per active customer (ARPAC) nearly tripled from $4.50 to $13.40, but its average monthly cost of serving each active customer stayed flat at $0.90. That stability indicates it isn't sacrificing its margins to cross-sell more financial products.
From 2021 to 2024, Nu's revenue grew at a CAGR of 89%. It turned profitable on a generally accepted accounting principles (GAAP) basis in 2023, and its earnings per share (EPS) nearly doubled in 2024. It achieved that expansion even as some of its top markets struggled with political instability, hyperinflation, and other macroeconomic headwinds.
NYSE: NU
Key Data Points
What happened to Nu over the past year?
Nu is still growing rapidly. However, its year-over-year growth in customers decelerated as its monthly activity rate dipped sequentially throughout most of the year. Currency headwinds and new investments also drove up its average monthly cost of serving each active customer; however, its ARPAC rose as those customers utilized a broader range of its financial services. As a result, its total revenue growth stabilized in the first half of 2025 and accelerated in the third quarter of the year.
|
Metric |
Q3 2024 |
Q4 2024 |
Q1 2025 |
Q2 2025 |
Q3 2025 |
|---|---|---|---|---|---|
|
Customer Growth (YOY) |
23% |
22% |
19% |
17% |
16% |
|
Monthly Activity Rate |
84% |
83.1% |
83.2% |
83.2% |
83.4% |
|
ARPAC |
$11.00 |
$10.70 |
$11.20 |
$12.20 |
$13.40 |
|
Average Monthly Cost to Serve Each Active Customer |
$0.70 |
$0.80 |
$0.70 |
$0.80 |
$0.90 |
|
Revenue Growth* (YOY) |
56% |
58% |
40% |
40% |
42% |
Data source: Nu Holdings. YOY = Year-over-year. *Currency-neutral basis.
Nu's top-line growth was robust, but its gross and net interest margins dipped as it expanded more aggressively in Mexico and Colombia to curb its dependence on its maturing Brazilian market. Both of those smaller (but higher-growth) markets required higher funding costs and credit allowances than Brazil, and expanding its more capital-intensive secured lending and payroll-backed loans businesses exacerbated that pressure on its margins. That's why its net income growth decelerated over the past year, even as its revenue growth stabilized.
|
Metric |
Q3 2024 |
Q4 2024 |
Q1 2025 |
Q2 2025 |
Q3 2025 |
|---|---|---|---|---|---|
|
Gross Margin |
46% |
45.6% |
40.6% |
42.2% |
43.5% |
|
Net Interest Margin |
18.4% |
17.7% |
17.5% |
17.7% |
17.3% |
|
Net Income Growth* (YOY) |
63% |
85% |
74% |
42% |
41% |
Data source: Nu Holdings. YOY = Year-over-year. *Currency-neutral basis.
What's next for Nu Holdings?
For the full year, analysts expect Nu's revenue and EPS to grow 36% and 46%, respectively. From 2025 to 2027, they expect Nu's revenue and EPS to increase at a CAGR of 30% and 37%, respectively, as it gains more members and cross-sells more financial features.
Its newly secured banking license in Mexico and its application for a full banking license in Brazil should fuel that growth. Those licenses will help Nu comply with the new banking regulations for fintech companies, enhance their credibility, and support the launch of new services. It should also increase its penetration rates in Mexico and Colombia. Its recent application for a U.S. bank charter could also help its expansion into the U.S. market.
Those catalysts should widen Nu's moat against diversified e-commerce and fintech companies, such as MercadoLibre (MELI +0.44%), as well as traditional brick-and-mortar banks. Amazon's (AMZN 0.20%) recent integration of NuBank's NuPay on its Brazilian website could strengthen its defenses against MercadoLibre's Mercado Pago payments platform.
Should you buy Nu's stock before February?
At $17, Nu's stock still looks reasonably valued at 20 times next year's earnings. The near-term macroeconomic concerns about Latin America are likely compressing its valuation, but it could attract significantly more attention if those headwinds dissipate. Therefore, if you expect Nu to at least meet analysts' expectations as it attracts more customers, it remains an excellent stock to buy ahead of its next earnings report in February.
