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    NU
    Earnings call· Mar 2026(Q1 FY26)

    Nu Holdings Q1 FY26 earnings call NU

    May 14, 2026 Source

    Executive summary

    Nu Holdings Ltd. Q1 FY26 – Record Revenue and Net Income Driven by Customer Growth and ARPAC Expansion

    Nu Holdings reported a strong Q1 FY26 with record revenue and net income, fueled by robust customer growth and ARPAC expansion. The company is deepening its Brazil presence, scaling international markets like Mexico, and integrating AI across operations for efficiency and innovation. Despite increased credit provisions from seasonality and portfolio mix, management highlighted resilient unit economics and strong balance sheet buffers, positioning Nu for continued profitable growth.

    Highlights

    5

    • Customer base grew to over 135 million, with Brazil surpassing 115 million and Mexico reaching 15 million.

    • Record revenue of $5 billion, driven by ARPAC expansion to $16 per active customer.

    • Record low efficiency ratio below 18%, reflecting structural progress and AI-driven improvements.

    • Historical high net income of $871 million, compounding at over 80% annually since 2022.

    • Mexico achieved IFRS profitability ahead of internal plans, with ARPAC nearly doubling.

    Concerns

    4

    • Consolidated cost of deposits slightly higher sequentially at 88% of interbank rate due to Brazil's seasonal effect.

    • Risk-adjusted NIM decreased by 100 bps sequentially to 9.5% due to elevated credit loss allowance.

    • Efficiency ratio of 17.6% includes timing benefits (2/3) that will normalize, with full-year expected to converge to 20%.

    • Brazil's household debt service ratio is a concern for some investors, though management views it as nuanced.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2026 efficiency ratio
    approximately 20%
    high materiality
    High
    IFRS Effective Tax Rate (ETR)
    15% to 20% range
    medium materiality
    High
    Managerial Effective Tax Rate (ETR)
    30% to 35% range
    medium materiality
    High
    U.S. investment OpEx headwind
    less than 100 basis points on our consolidated efficiency ratio
    medium materiality
    High
    Risk-adjusted NIM trajectory
    move back towards the level we operated at during the second half of 2025
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Brazil
    Solidified position as the largest private financial institution in the country. Still has significant growth runway in a $100B+ annual gross profit market.
    Customers: 115M+Monthly active customers: ~100MProfit pool share: ~7%
    		————
    Mexico
    Became the third largest financial institution. Achieved IFRS profitability ahead of internal plan. Market opportunity is where Brazil was a decade ago, with a profit pool exceeding $40 billion.
    Customers: 15M+Customer base growth (4 years): ~7xARPAC: nearly doubledEfficiency ratio reduction: 78 percentage pointsProfit pool share: <1%
    		———IFRS profitable
    Colombia
    Delivered another solid quarter of net additions, approaching 5 million customers.
    Customers: ~5M
    		————
    SME Brazil
    Largest SME base in Brazil, effectively built with zero customer acquisition cost. Expanding product offerings including secured and unsecured lines of credit. Significant growth opportunity in an underserved segment.
    Customers: 5M+Credit cards: 2M+
    		————

    Operational metrics

    14
    Total operating expenses
    below plan
    Q1 FY26

    OpEx came in below plan, with 1/3 from structural gains (AI-driven improvements, software consolidation, hiring discipline) and 2/3 from timing items (real estate, marketing phasing) that will normalize.

    Engineering throughput
    up over 50%
    YoY

    Driven by AI assistance, reaching close to 100% utilization of AI tools among employees.

    Weekly token consumption
    nearly 10x higher
    since start of year

    Reflects increased AI utilization.

    Testing cycles
    90% faster
    Q1 FY26

    Driven by AI assistance.

    Gross profit
    $1.88Bup 27% YoY FX-neutral
    Q1 FY26

    Reflects elevated CLA, but overall trend of diversification continues across credit, float, and fee businesses.

    Risk-adjusted NIM
    9.5%down 100 bps sequentially from 10.5%
    Q1 FY26

    Contraction due to additional CLA in Q1; expected to converge back to H2 2025 levels as seasonality normalizes.

    Cost of deposits
    88%slightly higher sequentially
    Q1 FY26

    Offset by improvements in Mexico and Colombia due to Brazil's Q4 seasonal effect reversal.

    AI Private Banker users
    15M+
    monthly active

    Serving users with financial insights, payments, credit advice, and debt resolution.

    High-income customer base growth (Brazil)
    24%
    YoY

    2 out of 5 high-income Brazilians are Nubank customers.

    High-income credit card volumes (Brazil)
    up 42%
    YoY

    One of the fastest segments for PV growth.

    High-income assets under custody (Brazil)
    up 36%
    YoY

    Reflects strong traction in affluent segments.

    Super core customer penetration (Brazil)
    3 out of 5 Brazilians
    Q1 FY26

    Reflects strong traction in affluent segments.

    Super core TPV and AUC growth (Brazil)
    35% to 40%
    Q1 FY26

    Reflects strong traction in affluent segments.

    Net income growth
    41%
    YoY FX-neutral

    Net income reached $871 million, the highest ever for a first quarter.

    Industry KPIs

    8
    MetricValueDetails
    Loans$37.2BUSD
    Deposits$42.4BUSD
    Allowance reserves16.2%%
    Net interest income$3.25BUSD
    Net interest margin21.1%%
    Net charge offs npls6.5%%
    Provision for credit losses$1.79BUSD
    Efficiency ratio operating leverage17.6%%

    Product announcements

    1
    ProductTypeDetails
    SME-specific products (Brazil)expansion

    Risks & headwinds

    5
    Seasonality in credit metricsQ1 annually

    NPL 15-90 tends to peak in Q1; Q1 FY26 print of 5% (up 89 bps from year-end) is consistent with seasonal pattern.

    Mitigation: Anticipated by models; pricing discipline ensures attractive returns and predictable losses. Risk-adjusted NIM expected to normalize after Q1.

    Brazil household debt service ratio

    Not quantified, but noted as a concern for investors.

    Mitigation: Management views data as nuanced; employment in Brazil remains strong; income tax exemption for earnings up to BRL 5,000 is a structural tailwind improving disposable income. Short duration of portfolio allows for fast reaction to asset quality movements. Desenrola program is an additional tailwind.

    Elevated Credit Loss Allowance (CLA) due to portfolio growth and mix shiftQ1 FY26

    CLA closed at $1.79B (up 33% QoQ FX-neutral); total exposure reached $70.7B (up 44% YoY FX-neutral); 98% of new exposure tilted towards credit cards and unsecured lending.

    Mitigation: Reflects deliberate scaling and upfront provisioning (IFRS 9) for higher-yielding, higher-loss products, not underlying credit quality degradation. Balance sheet holds considerable buffers (16.2% total coverage, 2.5x 90-plus delinquency balance).

    Timing items impacting efficiency ratioNext quarters

    2/3 of Q1 FY26 OpEx outperformance due to timing (real estate, marketing phasing).

    Mitigation: Will normalize in subsequent quarters; full-year 2026 efficiency ratio expected to converge to approximately 20%.

    Regulatory risk and high FPD in private payroll loans

    10% to 15% FPD (first payment default) observed; conversation about capping pricing.

    Mitigation: Nu took a more careful approach, going slower and measuring risks. Believes long-term advantages (data, trust, cost to serve) will lead to market leadership.

    Q&A highlights

    6

    Details on the new SME products, competitive edge, and potential size of the business.

    David Velez highlighted Nu's 5 million SME customers acquired at zero CAC, cross-selling from individual customers. He mentioned new credit card and secured/unsecured lines of credit, including government-guaranteed programs. He sees a "blue ocean" opportunity, expanding beyond micro-entrepreneurs to larger SMEs, leveraging Nu's advantages in data and consumer trust.

    “I actually think this is probably one of the most underappreciated opportunities we have at Nu.”

    asked by Jorge Kuri · answered by David Velez-Osomo

    2 min read8 chapters

    Detailed Narrative

    01

    AI Transformation and Impact

    Nu is undergoing an AI transformation, redesigning financial products and services from the ground up. This involves AI assistance (near 100% employee utilization, 50% engineering throughput increase), workflow reinvention (new AI-native customer experiences by year-end), and the AI-native bank (AI Private Banker for 15M+ users, nuFormer for credit card decisioning and unsecured lending). The company leverages its scale, proprietary tech stack, and talent for AI leadership.

    02

    Brazil Market Opportunity

    Despite being the largest private financial institution in Brazil with over 115 million customers, Nu's share of the addressable profit pool is only about 7%. The market exceeds $100 billion in annual gross profit and is expected to grow, offering significant runway for product expansion and deeper customer engagement.

    03

    Mexico Market Growth and Profitability

    Mexico presents a substantial opportunity, with a profit pool exceeding $40 billion and growing. Nu has grown its customer base from 2 million to 15 million in four years, with ARPAC nearly doubling. The company achieved IFRS profitability in Mexico ahead of schedule, demonstrating the successful replication of its earnings-generating formula.

    04

    Credit Portfolio Dynamics

    The increase in Credit Loss Allowance (CLA) was primarily driven by seasonality, portfolio growth (44% YoY FX-neutral total exposure to $70.7 billion), and a mix shift towards higher-yielding, higher-loss products like credit cards and unsecured lending (98% of new exposure). Management emphasized that these factors do not indicate asset quality degradation, but rather deliberate scaling and accurate risk pricing.

    05

    Efficiency and Operating Leverage

    Nu achieved a record low efficiency ratio of 17.6% (16.6% at core), driven by strong revenue growth and OpEx below plan. While 2/3 of the OpEx outperformance was due to timing, 1/3 reflected structural efficiency gains from AI-driven improvements, software consolidation, and hiring discipline. The company expects full-year 2026 efficiency ratio to be around 20%.

    06

    Strategic International Expansion (U.S.)

    Nu views its U.S. expansion as a "call option," investing a small amount of capital (less than 100 bps impact on efficiency ratio in 2026/2027) to test product-market fit. This strategy aims for significant upside if successful, with bounded downside risk, without jeopardizing core Latin American operations.

    07

    SME Business in Brazil

    Nu has silently built the largest SME customer base in Brazil with 5 million customers at zero customer acquisition cost, cross-selling from its large individual customer base. The company is expanding its SME product offerings, including credit cards and new lines of credit, seeing a "blue ocean" opportunity in this underserved segment.

    08

    Private Payroll Loans Strategy

    Nu has taken a more cautious approach to private payroll loans due to initial higher-than-anticipated risk and regulatory concerns, including potential pricing caps. While competitors focused on rapid growth, Nu prioritized a careful, measured expansion, believing its long-term advantages in data, trust, and cost-to-serve will ultimately lead to market leadership in this product.

    AI-generated summary of the company’s earnings call. Not investment advice.