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    NU
    Earnings call· Jun 2025(Q2 FY25)

    Nu Holdings Ltd. NU

    Aug 14, 2025 Source

    Executive summary

    Nu Holdings Q2 FY25 — Strong Growth and Profitability with Strategic Leadership Additions

    Nu Holdings delivered another quarter of robust growth and profitability, expanding its customer base to nearly 123 million and achieving record revenues and net income. Strategic leadership additions aim to strengthen its position in Latin America and prepare for global expansion. The company continues to demonstrate strong operating leverage and disciplined credit underwriting, even while making significant investments in less mature markets and new product development.

    Highlights

    7

    • Customer base expanded to nearly 123 million, with over 4.1 million net additions.

    • Revenue reached $3.7 billion in Q2, representing an 85% annualized growth rate since 2021.

    • Gross profit rose 78% annually, reaching $1.5 billion, with gross profit margin improving to 42.2% from 40.6% QoQ.

    • Efficiency ratio cut by more than half to 28.3% in Q2 FY25.

    • Quarterly net income almost tripled in 2 years to $637 million, up 42% YoY FX neutral.

    • Return on equity reached 28%, tracking well above industry peers.

    • 15- to 90-day NPL ratio declined to 4.4%, a 30 bps improvement QoQ.

    Concerns

    4

    • Efficiency ratio rose slightly to 28.3% due to RSU expenses and higher marketing investments.

    • NIM in Mexico and Colombia weighed down by investments, with full impact of deposit yield adjustments expected gradually over coming quarters.

    • Loan originations for INSS (public payroll loans) dropped by about 50% in Q2 due to system disruption.

    • Private payroll loan product not yet fully tested, with first payment defaults in the industry at 10% to 18%.

    Guidance & targets

    5
    CategoryTargetConfidence
    INSS origination resumption
    Resume historical growth
    medium materiality
    Medium
    Unsecured lending originations growth
    Fairly strongly
    medium materiality
    High
    Efficiency ratio
    Further decline
    high materiality
    High
    Impact of deposit yield adjustments on cost of funding
    Full impact to materialize gradually
    medium materiality
    High
    Net Interest Margin (NIM)
    Further room for expansion
    high materiality
    High

    Operational metrics

    29
    Customer base
    123 million+4.1 million net additions
    Q2 FY25

    Total customer base across all geographies.

    Activity rate
    83%
    Q2 FY25

    Underscoring depth of engagement across the platform.

    ARPAC CAGR
    34%
    Since 2021

    Compounding effect driving revenue growth.

    Monthly ARPAC
    $12.2up 18% year-over-year
    Q2 FY25

    Crossed $12 mark for the first time. Mature cohorts show higher monetization.

    Cost to serve
    $0.80stable
    Q2 FY25

    Per active customer, reflecting efficiency of the platform.

    Total credit balances
    $27.3 billionup 40% year-over-year on an FX neutral basis
    Q2 FY25

    Diversification across all segments.

    Secured and unsecured loans as % of total portfolio
    over 1/3up from 25% just a year ago
    Q2 FY25

    Reflects intentional shift in mix.

    Loan originations
    $3.6 billion43% year-over-year increase on an FX neutral basis
    Q2 FY25

    Highest origination volume ever reached. INSS origination impacted by system disruption.

    Credit card customers
    6.6 millionup from 4.3 million a year ago
    Q2 FY25

    Accounted for more than 1/4 of all Nu credit cards issued in Mexico over the last 12 months.

    Credit card customers growth
    34%year-over-year
    Q2 FY25

    Scaling quickly in less mature countries.

    Credit card market share increase
    >100 bps
    Q2 FY25

    Based on latest reading in credit card receivables.

    Total deposits
    $36.6 billionup 41% year-over-year on an FX neutral basis
    Q2 FY25

    Core pillar of long-term strategy, enabling leading retail financial institution in the region.

    Interest-earning portfolio growth
    70%year-over-year on an FX neutral basis
    Q2 FY25

    Gained strong traction recently.

    Deposits
    >$6 billion
    Q2 FY25

    Even after adjusting down deeper rates, underscoring brand value.

    Loan-to-deposit ratio
    43%down from 44%
    Q2 FY25

    Slight reduction quarter-over-quarter.

    Risk-adjusted NIM
    9.2%
    Q2 FY25

    Strong NII more than offset small increase in CLA expenses.

    Gross profit
    $1.5 billionup 24% year-over-year on an FX neutral basis
    Q2 FY25

    Record high, driven by strong NII expansion and stable credit loss allowances.

    Gross profit margin
    42.2%up from 40.6% in the past quarter
    Q2 FY25

    Improved sequentially.

    Net income
    $637 millionup 42% year-over-year on an FX neutral basis
    Q2 FY25

    Reached a record high.

    Market capital financial services globally
    >$8 trillion
    Current

    Context for the opportunity in financial technology disruption.

    Private payroll loan first payment defaults
    10% to 18%
    Early stages

    Observed in the industry, higher than expected.

    Credit card customers using transactional financing
    >40%
    Q2 FY25

    Primarily Pix financing functionality, showing high attach rate.

    Incumbent banks ARPAC
    $45
    Current

    Compared to Nu's current ARPAC of $12.2 and mature cohorts at $27.3.

    Retail banking profit pool from credit
    65% to 70%
    Current

    Proxy for where the book of growth is expected to come from for ARPAC expansion.

    Adult population served
    13%
    Q2 FY25

    Surpassed 12 million customers.

    Population choosing Nu
    10%
    Q2 FY25

    Nearly 10% of the population.

    Active unsecured loans customer base growth
    56%year-over-year
    Q2 FY25

    All segments continue to post solid growth.

    Secured customer base growth
    more than doubledyear-over-year
    Q2 FY25

    All segments continue to post solid growth.

    Crypto customers growth
    41%year-over-year
    Q2 FY25

    All segments continue to post solid growth.

    Industry KPIs

    9
    MetricValueDetails
    Loans$27.3 billionUSD
    Deposits$36.6 billionUSD
    Rotce ROE28%%
    Allowance reserves—
    Net interest income$2.1 billionUSD
    Net interest margin—
    Net charge offs npls4.4% (15-90 day NPL), 6.6% (90+ day NPL)%
    Provision for credit losses—
    Efficiency ratio operating leverage28.3%%

    Risks & headwinds

    4
    Macroeconomic situation and potential credit cycle deteriorationNext 12, 24, 36 months

    Not quantified, but management assumes future will be worse than past for underwriting.

    Mitigation: Conservative underwriting, stress-testing cohorts to be NPV positive even if losses double.

    Disruption in INSS (public payroll loan) systemQ2 FY25, expected to be fixed by Aug/Sep 2025.

    Industry origination dropped by >50%, Nu's origination dropped by ~50%.

    Mitigation: Expects resumption of historical growth.

    Quality of collateral for private payroll loan productEarly stages of product launch (announced late March, launched early April).

    First payment defaults in the industry at 10% to 18%.

    Mitigation: Holding back on aggressive expansion until collateral system is more tested and solidified; believes they will win as lowest cost manufacturer when product matures.

    Investments in Mexico and Colombia weighing on short-term marginsOngoing, coming quarters.

    Not explicitly quantified, but NIM in these regions is impacted.

    Mitigation: Critical for unlocking long-term value; expect margin expansion as balance sheet is optimized and cost of funding lowered.

    What to watch in Q3 FY25

    5

    INSS Origination Resumption

    End of August, early September 2025.
    CurrentIndustry origination dropped by >50% in Q2 FY25.
    TargetResumption of historical growth.

    Why it matters

    Significant impact on secured lending growth; indicates resolution of system disruption.

    We do expect that this will be fixed and resolved very promptly. We are assuming that by end of August, early September, origination of INSS, not only for us but for the entire industry, will resume their historical growth.

    Q&A highlights

    5

    How do the new hires (Roberto Campos Neto, Eric Young, Ethan Eismann) support Nubank's long-term strategy and potential acceleration of growth outside Brazil or into new markets?

    David Velez explained that the new hires are world-class talent brought in to prepare Nubank for the 'next 5 to 10 years' and to play in 'top leagues' of financial services, which is still dominated by traditional banks. Roberto Campos Neto strengthens regulatory and public policy positioning in Latin America, while Eric Young (CTO) and Ethan Eismann (Chief Design Officer) enhance technology and product capabilities for scaling and global expansion. The changes are meant to strengthen existing markets and prepare for internationalization.

    “I do think these additions are -- help us both strengthening the market-leading position we have in Brazil and Latin America by upping up our game and also prepare us to really go play in the big leagues as we think about internationalization over the next few years.”

    asked by Eduardo Rosman · answered by David Velez-Osomo

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Leadership Additions

    Nu Holdings welcomed Roberto Campos Neto as Vice Chairman and Head of Public Policy, Eric Young as CTO, and Ethan Eismann as Chief Design Officer. These additions are aimed at strengthening the company's position in Latin America, enhancing its technology and product capabilities, and preparing for future international expansion, reflecting a long-term strategy to compete in the global financial services market, where over 95% of the market capital is still dominated by traditional banks. Eric Young's experience includes leading products that reach over 900 million customers globally.

    02

    Operating Leverage and Efficiency

    The company continues to demonstrate strong operating leverage, with monthly ARPAC increasing to $12.2 (up 18% YoY) while cost to serve remains stable at $0.80 per active customer. This efficiency allows for competitive pricing and increased earnings power, with the efficiency ratio cut by more than half to 28.3% in Q2 FY25. The ARPAC of incumbent banks is largely at $45, indicating significant room for Nu's ARPAC expansion.

    03

    Credit Portfolio Diversification

    Total credit balances reached $27.3 billion, up 40% YoY FX neutral, driven by secured lending (up 200%), unsecured loans (up 70%), and credit cards (up 24%). Secured and unsecured loans now represent over 1/3 of the total portfolio, up from 25% a year ago, reflecting an intentional shift towards a broader credit spectrum. Installment balances remain the primary component of the interest-earning credit card portfolio, typically ranging between 27% and 29% of total balances.

    04

    Deposit Franchise Growth

    Total deposits reached $36.6 billion, up 41% YoY FX neutral, with strong progress in Mexico and Colombia. Brazil remains the anchor, and the company aims to be the primary banking relationship for customers by offering competitive deposit solutions. In Mexico, deposit rates were lowered in early July, but flows have remained stable due to improved value proposition from added functionalities like OXXO as a distribution channel and cash withdrawals.

    05

    Mexico Market Progress

    In Mexico, Nu surpassed 12 million customers, now serving approximately 13% of the adult population. Credit card customers reached 6.6 million, up from 4.3 million a year ago, accounting for over 1/4 of all new credit cards issued in Mexico over the last 12 months. Deposits exceed $6 billion, and the interest-earning portfolio grew over 70% YoY FX neutral, demonstrating early success in expanding access to credit and building a resilient local currency liability franchise.

    06

    Credit Underwriting and AI

    Nu is implementing major upgrades to its credit models, leveraging traditional machine learning, neural networks, and predictive AI technologies, along with increased data from open finance. This has allowed for consistent increases in credit underwriting, credit limits, and utilizations, primarily benefiting existing mass-market customers initially. The Hyperplane acquisition has provided a new platform to develop and deploy multiple models for various segments and applications, including collections, fraud, and cross-sell.

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