Shares of Nu Holdings (NU +10.82%) opened 13% higher on Friday. The Brazilian company behind the Nubank fintech brand reported Q2 results last night, crushing Wall Street estimates.
Image source: The Motley Fool.
Nu's Q2 by the numbers
Nu's IFRS revenues (the international equivalent of GAAP standards) rose 50% year-over-year to $5.51 billion. Adjusted earnings jumped 66% to $0.22 per diluted share. The average analyst had expected earnings near $0.20 per share on revenue in the neighborhood of $5.39 billion.
The company added 4 million customers during the quarter. The global client count was 139 million, up from 122.7 million in the year-ago period. The Brazilian consumer market remained Nu's core business, but the customer count soared in Mexico (up 31.7%) and Colombia (up 55.9%).
Crucially, Nu's payment volume rose 30.3% year over year, more than doubling the 13.3% customer growth. The fintech is not only attracting many new customers, but existing ones are also using its services more often.
Return on equity held steady at 33%, and the efficiency ratio came in at 19.5%. For context, most traditional banks operate with efficiency ratios in the 50%-60% range, and lower ratios are better. Nu's digital-only model simply costs less to run.
NYSE: NU
Key Data Points
The next chapter starts in Mexico
The numbers tell a familiar story for Nu watchers: more customers, deeper engagement, better margins. But the real headline came from Mexico, where regulators just handed Nu a full banking license. Two weeks later, Nubank is the largest digital bank in a country where 85% of people still prefer paying in cash. The runway is long.
CEO David Vélez framed Mexico as "Brazil's playbook running faster." These operations reached breakeven in six years versus eight in Brazil. Early cohorts are monetizing at more than double the rate Brazil showed at the same stage.
Meanwhile, Nu is definitely planning U.S. services. On the earnings call, management discussed the upcoming launch and AI's role in building out North American services. Freshly installed CFO Rob Livingston works from a San Francisco Bay office, bringing years of CFO experience from mighty Visa's (V -0.64%) North American division.
Nu expects to spend 12 to 30 months building out its U.S. credit capabilities after launch. If Mexico is today's growth engine, I can't wait to see the U.S. launch.
