Nu Holdings Ltd. · NYSE:NU
Nu — Q1 2023 Earnings Presentation
55 slides from Nu's earnings presentation, May 15, 2023
Slide 1: Q1 2023 Earnings Presentation
Q1 2023 Earnings Presentation May 15, 2023 First Quarter 2023 Results 1
Slide 2: Disclaimer
Disclaimer This presentation speaks at the date hereof and the Company is under no obligation to update or keep current the information contained in this presentation. Any information expressed herein is subject to change without notice. Any market or other third- party data included in this present
Slide 3: Continued Growth Of The World's Largest Digital Banking Platform
Continued Growth Of The World's Largest Digital Banking Platform 80MM 79.1MM 90.0 April’23 Customers +33% YoY 79.1MM Customers Open Finance 74.6 46% of Adult Population of Brazil 80.0 SME 1st Street Mode 70.4 82% Monthly Activity Rate 70 .0 65.3 Ultraviolet CC Bank Slip Pay 59.6 PIX BNPL US$ 1.6 BN
Slide 4: Continued Compounding Of Growth, With Meaningful Switch To Profitability
Continued Compounding Of Growth, With Meaningful Switch To Profitability Customers (MM) Revenues (US$ MM) Gross Profit (US$ MM) Net Income (Loss) (US$ MM) CAGR: 147% CAGR: 128% CAGR: N/A CAGR: 46% FXN FXN FXN 650.9 141.8 1,618.7 79.1 2.1 x 74.6 6.6 x 5.6x 578.3 1,450.5 70.4 65.3 1,306.9 59.6 1,157.5
Slide 5: Significant Growth Ahead In Terms of Customer Penetration
Significant Growth Ahead In Terms of Customer Penetration Our target countries account for nearly 2/3 of the population of Latin America Customer Penetration Nu’s share of Adult Population Total Adult 171M Population 96M 40M 46% 3% 2% 9 years 3 years 2 years Brazil Mexico Colombia First Quarter 2023
Slide 6: Significant Growth Ahead In Terms of Product Penetration
Significant Growth Ahead In Terms of Product Penetration We are in the first minute of penetrating a US$1 trillion1 market cap industry Profit pool for key products The Profit Pool of our Three Geos is Estimated at US$140 Billion Brazil, Mexico and Colombia Revenues net of cost of funds, cost of ris
Slide 7: Significant Profitability Ahead
Significant Profitability Ahead Our digital banking model provides for massive operating leverage Best-in-Class Efficiency Monthly ARPAC & Cost to Serve (US$) Information presented in both charts is for Brazil only ARPAC Cost to Serve 8.4 7.9 7.8 8.0 NII + F&C (US$MM) Costs (US$MM) 1,086.5 Efficienc
Slide 8: Significant Profitability Ahead (cont'd)
Significant Profitability Ahead (cont’d) Brazil starting to demonstrate the earnings power of our digital banking platform Financial Metrics Performance Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 FY21 FY22 (US$M) 813 1,115 1,227 1,351 1,507 1,647 4,506 Revenues 205% 281% 158% 110% 87% 132% 159% YoY FXN 877 1,158
Slide 9: 1Q'23 Results
1Q’23 Results First Quarter 2023 Results 9
Slide 10: Our Model Powers Our Earnings Generating Formula
Our Model Powers Our Earnings Generating Formula Rapidly Growing Increasing Revenue Low Cost Substantial Customer Base Per Customer Operating Platform Earnings Power ACTIVE CUSTOMERS ARPAC COST TO SERVE First Quarter 2023 Results 10
Slide 11: Strong Customer Acquisition and Activity Rate Improvement Continue
Strong Customer Acquisition and Activity Rate Improvement Continue YoY: 33% Customers (MM) Active Customers YoY: 40% Active Customers 46.5 52.3 57.4 61.2 64.9 (MM) 79.1 74.6 70.4 65.3 59.6 Activity Rate 81.9% 82.1% (%) 81.6% 80.2% 78.0% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 First Quarter 2023 Results 11 Not
Slide 12: Compounding Effect of More Engagement And More Cross-sell Driving ARPAC Expansion
Compounding Effect of More Engagement And More Cross-sell Driving ARPAC Expansion Active Customers Using NuAccount Number of Products Per Monthly ARPAC by Quarterly Cohort as their Primary Banking Account (%) Active Customer (US$ | FX Neutral) US$ month/ Avg. monthly ARPAC of $8.6/month while some 7
Slide 13: Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion
Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion ARPAC (US$) Revenues (US$MM) YoY: 30% YoY: 87% FXN FXN 1,619 8.6 7.9 8.2 1,451 7.8 1,307 6.7 1,158 877 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note 1: Amounts are presented in US dollars and growth rates on a
Slide 14: Compounding Effect of Customer Growth and Higher Limits Driving Up Purchase Volume
Compounding Effect of Customer Growth and Higher Limits Driving Up Purchase Volume Purchase Volume (US$BN) Purchase Volume per Customer (US$) Prepaid Cards YoY: 48% FXN US$ month/ customer Credit Cards FXN $350 Credit Card: 44% FXN Prepaid Card: 55% FXN 23.8 23.3 21.2 $300 20.0 8.7 8.2 $250 15.9 7.6
Slide 15: Strong Performance of Credit Cards Coupled with Personal Loan Reacceleration
Strong Performance of Credit Cards Coupled with Personal Loan Reacceleration Total Portfolio (US$BN) Total Portfolio (%) Personal Loans YoY: 54% Personal Loans Credit Cards FXN Credit Cards Credit Card: 64% FXN Personal Loans: 21% FXN 12.8 23% 21% 20% 18% 18% 11.3 2.3 9.7 2.0 8.8 9.1 1.9 2.0 2.0 77%
Slide 16: Gap to the Market on Interest Earning Portfolio Narrows as Nu Expands Financing Features
Gap to the Market on Interest Earning Portfolio (IEP) Narrows as Nu Expands Financing Features Credit Card IEP Evolution (% of Total Receivables) Nu Interest Earning Installments Balance Nu Revolving Balance Nu Non-Interest Earning Balance Market Interest Earning Installments Balance Market Revolvin
Slide 17: Personal Loan Origination Rebounds as Unit Economics Prove Resilient
Personal Loan Origination Rebounds as Unit Economics Prove Resilient Origination (R$Bn) YoY: 40% BRL 6.3 4.8 5.0 4.5 4.6 Credit Yield (%) 5.6% 5.5% 5.7% 5.3% 4.0% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 First Quarter 2023 Results 17 Note 1: Amounts are presented in BRL. Note 2: Credit Yield is the average rat
Slide 18: Solid Funding Cost and Deposits Volumes Follow Seasonal Pattern
Solid Funding Cost and Deposits Volumes Follow Seasonal Pattern Deposits (US$Bn) YoY: 34% FXN 15.8 15.8 14.0 12.6 13.3 Cost of Funding as a % of CDI 98% 98% 95% 78% 81% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 First Quarter 2023 Results 18 Note 1: Amounts are presented in US dollars. Note 2: Rates presented ar
Slide 19: NIM Expanded Sequentially Driven By Better Credit Mix And Rising Loan-to-Deposit Ratio
NIM Expanded Sequentially Driven By Better Credit Mix And Rising Loan-to-Deposit Ratio NII (US$MM) & NIM (%) YoY: 138% FXN 815.3 688.0 15.7% NIM 527.4 (%) 445.5 13.5% 346.4 11.1% 9.7% 8.5% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note 1: ‘NII’ (Net Interest Income) is calculated as Interest income and gains (l
Slide 20: Cost to Serve Remains Under Control and Underscores Operating Leverage Potential
Cost to Serve Remains Under Control and Underscores Operating Leverage Potential Cost to Serve per Active Customer(US$) YoY: 14% FXN Adjusted by one-off: 0% 0.9 0.8 0.8 0.8 0.8 0.7 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note 1: Amounts are presented in US dollars and growth rates on an FX Neutral basis. For
Slide 21: Gross Profit Growth Path Remains Strong and Margin Expansion Continues
Gross Profit Growth Path Remains Strong and Margin Expansion Continues Gross Profit (US$MM) YoY: 124% FXN 650.9 578.3 427.0 Gross Profit Margin 363.5 39.9% 40.2% (%) 294.1 33.5% 32.7% 31.4% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 First Quarter 2023 Results 21 Note 1: Amounts are presented in US dollars and gr
Slide 22: Improving Operating Leverage as Business Scales
Improving Operating Leverage as Business Scales Efficiency 91.6% NII + F&C (US$MM) Costs (US$MM) Efficiency Ratio Efficiency Ratio Ex. SBC 1,178.5 75.8% 72.7% 72.3% 1,043.0 68.6% 65.6% 847.0 750.0 60.7% 57.4% 604.2 58.2% 56.1% 55.1% 459.0 52.7% 379.5 50.2% 47.4% 278.9 45.8% 213.3 41.0% 39.0% (195.3)
Slide 23: Sequential Improvement in Both Net Income and Adjusted Net Income
Sequential Improvement in Both Net Income and Adjusted Net Income Net Income (US$MM) Net Income (Loss) Adj. Net Income (Loss) 182.4 113.8 63.0 141.8 17.0 58.0 10.1 7.8 (45.1) (29.9) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 First Quarter 2023 Results 23 Note 1: Q4’22 Net Income excludes the effect of the one-ti
Slide 24: Best-In-Class Cost Structure Lays Foundation For Sustainable Long-Term Differentiation
Best-In-Class Cost Structure Lays Foundation For Sustainable Long-Term Differentiation The Four Cost Pillars of Retail Financial Services COST TO ACQUIRE COST TO SERVE COST OF RISK COST OF FUNDING $6.5 <$1 5.5% $15.8Bn Per Customer Monthly Avg. per Active Consumer Finance Deposits Customer Delinquen
Slide 25: Q1'23 Credit Underwriting
Q1’23 Credit Underwriting First Quarter 2023 Results 25 First Quarter 2023 Results 25
Slide 26: Delinquency Largely Followed Seasonal Patterns in Q1'23
Delinquency Largely Followed Seasonal Patterns in Q1’23 15-90 NPLs 90+ NPLs Historical Q1 15-90 Historical Q1 90+ NPL NPL Seasonality Seasonality +80 bps 0 bps 6.2% 6.0% 5.6% 6.2% 5.3% 5.0% 5.1% 5.6% 5.5% 4.4% 4.4% 4.2% 5.1% 5.2% 5.2% 5.0% 5.1% 5.1% 5.1% 5.0% 5.0% 3.7% 4.9% 3.9% 3.9% 4.7% 3.7% 3.7%
Slide 27: Nu Has Shown Superior Credit Underwriting Across Income Bands For Credit Cards
Nu Has Shown Superior Credit Underwriting Across Income Bands For Credit Cards Nu NPL 90+ By Income Band | Defined by Minimum Wage (MW) Market % Adult Population <1x MW 35% 1x to 2x MW 33% 2x to 3x MW 15% 15.3% 11.5% 10.7% 8.3% 8.8% 6.7% 7.4% 6.8% 5.5% 5.8% 5.9% 5.3% Jan 19 Mar 23 Jan 19 Mar 23 Jan
Slide 28: Sequential Risk-Adjusted NIM Improvement Shows Effective Pricing for Risk
Sequential Risk-Adjusted NIM Improvement Shows Effective Pricing for Risk Credit Loss Allowance & Risk Adj. NIM 474.8 415.2 375.2 6.6% 338.5 Risk Adj. 5.4% 275.7 NIM (%) 199.7 3.2% 127.0 71.3 82.7 2.3% 2.6% 2.0% 1.7% 1.3% 2.1% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note 1: ‘CLA’ stand
Slide 29: Wrapping up
Wrapping up First Quarter 2023 Results 29 First Quarter 2023 Results 29
Slide 30: We Have Built Capabilities that Enable us to Aim Much Higher
We Have Built Capabilities that Enable us to Aim Much Higher One of the most valuable and loved brands in Latin America, strengthened Brand by the largest NPS of any company in the region One of the largest consumer bases of Latin America, which enables us to Scale have one of the lowest cost struct
Slide 31: Our Road Ahead
Our Road Ahead Money Platform Individual Business Customers Customers A relevant, loved and The most efficient frequently-used app Financial Services Non-Financial Services channel to convert A full set of best-in-class and A marketplace that offers partners' millions of shoppers The most efficient
Slide 32: Q&A
Q&A First Quarter 2023 Results 32
Slide 33: Appendix
Appendix First Quarter 2023 Results 33
Slide 34: Capital and Liquidity Positions
Capital and Liquidity Positions Capital Position (US$Bn) Liquidity Position (US$Bn) Nu Holdings Cash & Equivalents Capital Excess 4.1 Capital Requirement LDR 33% >3x ~3x 2.4 1.7 15.8 1.3 0.6 0.6 0.5 1.1 1.1 5.2 0.8 NuFIN Capital Position Prudential Conglomerate Nu Holdings Interest Earning Portfolio
Slide 35: Evolution of Formation Ratios
Evolution of Formation Ratios NPL Formation Stage 3 Formation 3.0% 3.2% 2.9% 2.9% 2.9% 3.4% 2.5% 2.6% 2.6% 3.1% 3.2% 3.1% 2.9% 2.7% 2.6% 2.1% 2.5% 1.9% 2.0% 1.9% 1.8% 1.7% 2.3% 1.6% 1.6% 1.6% 1.9% 2.0% 1.9% 2.0% 2.0% 1.9% 2.3% 1.7% 1.6% 2.5% 1.1% 0.9% 1.1% 0.9% 0.4% 0.4% Consumer Finance Consumer Fi
Slide 36: Evolution of Coverage Ratios
Evolution of Coverage Ratios Coverage Ratio Over Total Balance Coverage Ratio Over NPL 90+ 262.6% 263.9% 257.5% 11.6% 242.5% 238.0% 235.2% 10.6% 10.9% 223.0% 213.3% 9.7% 11.2% 208.6% 199.0% 9.0% 9.1% 8.8% 8.7% 8.6% 174.6% 180.3% 8.1% 173.0% 170.0% 7.7% 7.9% 7.8% 150.7% 7.4% 7.5% 189.5% 7.2% 139.3% 6
Slide 37: Nu Has Shown Superior Credit Underwriting Across Income Bands For Consumer Finance
Nu Has Shown Superior Credit Underwriting Across Income Bands For Consumer Finance Nu NPL 90+ By Income Band | Defined by Minimum Wage (MW) Market % Adult Population BASED ON INTERNAL ESTIMATES <1x MW 35% 1x to 2x MW 33% 2x to 3x MW 15% 15.2% 12.5% 11.8% 8.3% 8.8% 6.7% 9.4% 9.0% 7.6% 5.5% 5.8% 5.3%
Slide 38: Credit Card: Superior Asset Quality Even Adjusted by Growth
Credit Card: Superior Asset Quality Even Adjusted by Growth Nu LAGGED NPL 90+ By Income Band | Defined by Minimum Wage (MW) Market % Adult Population 18.0% <1x MW 35% 1x to 2x MW 33% 16.6% 2x to 3x MW 15% 12.2% 11.7% 10.9% 10.4% 12.1% 8.5% 10.4% 8.2% 5.9% 6.1% Jan 20 Mar 23 Jan 20 Mar 23 Jan 20 Mar
Slide 39: Consumer Finance: Superior Asset Quality Even Adjusted by Growth
Consumer Finance: Superior Asset Quality Even Adjusted by Growth Nu LAGGED NPL 90+ By Income Band | Defined by Minimum Wage (MW) Market % Adult Population BASED ON INTERNAL ESTIMATES <1x MW 35% 19.3% 1x to 2x MW 33% 2x to 3x MW 15% 16.8% 12.2% 11.7% 11.6% 13.3% 13.1% 12.3% 8.5% 8.4% 7.7% 6.0% Jan 20
Slide 40: Evolution of Credit on an FX Neutral basis
Evolution of Credit on an FX Neutral basis Total Portfolio (US$Bn, FX Neutral) Personal Loans Credit Cards YoY: 54% FXN 12.8 11.7 2.3 10.4 2.1 9.5 8.3 2.0 2.0 1.9 10.5 9.7 8.3 7.4 6.4 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Credit Cards: 64% FXN | Personal Loans: 21% FXN First Quarter 2023 Results 40 Note 1:
Slide 41: Strong Unit Economics Across All Credit Portfolios
Strong Unit Economics Across All Credit Portfolios Credit Cards Cumulative Gross Profit Margin Personal Loans Cumulative Gross Profit Margin (as % of Revenues minus cost of funding) (as % of Revenues minus cost of funding) 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 1 5 9 13 17 21 25 29 33 37 41
Slide 42: Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion
Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion ARPAC (US$, FX Neutral) Revenues (US$MM, FX Neutral) YoY: 30% YoY: 87% FXN FXN 1,618.7 8.3 8.6 8.1 1,476.5 7.6 1,340.7 6.6 1,126.5 867.5 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note 1: Amounts and growth rate
Slide 43: Compounding Effect of Customer Growth and Higher Limits Driving Up Purchase Volume
Compounding Effect of Customer Growth and Higher Limits Driving Up Purchase Volume Purchase Volume (US$Bn, FX Neutral) Prepaid Cards YoY: 48% Credit Cards FXN 24.3 23.3 21.7 19.5 8.8 8.2 15.8 7.7 6.8 5.3 15.5 15.1 12.7 14.0 10.5 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Prepaid Card: 55% FXN | Credit Card: 44%
Slide 44: NIM Expanded Sequentially Driven by Better Credit Mix and Rising Loan-to-Deposit Ratio
NIM Expanded Sequentially Driven by Better Credit Mix and Rising Loan-to-Deposit Ratio NII & NIM (US$ (US$MM, & NIM FXN) MM, FX Neutral) (%) 815.3 700.3 15.7% 541.0 NIM (%) 433.6 13.2% 342.5 10.7% 8.9% 9.1% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note 1: ‘NII’ (Net Interest Income) is calculated as Interest i
Slide 45: Cost to Serve Remains Under Control and Underscores Operating Leverage Potential
Cost to Serve Remains Under Control and Underscores Operating Leverage Potential Cost to Serve per Active Customer (US$, FX Neutral) YoY: 14% FXN YoY: Adjusted 0% 0% by one-off: FXN 0.9 0.8 0.8 0.8 0.8 0.7 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Note 1: Amounts and growth rates are presented on an FX Neutral
Slide 46: Gross Profit Growth Path Remains Strong and Margin Expansion Continues
Gross Profit Growth Path Remains Strong and Margin Expansion Continues Gross Profit (US$MM, FX Neutral) YoY: 124% FXN 650.9 588.7 438.0 40.2% 353.8 39.9% 290.8 33.5% 32.7% 31.4% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 First Quarter 2023 Results 46 Note 1: Amounts and growth rates are presented on an FX Neutra
Slide 47: Portfolio Growth Continues To be the Main Drive of Provision Balance Increase
Portfolio Growth Continues To be the Main Drive of Provision Balance Increase Provisions Bridge (US$MM, FXN) (6) 163100% 221 141600% 1,632 1,416 0% 0% Q4'22 ECL Growth Risk Q1'23 ECL First Quarter 2023 Results 47 Note 1: The information presented is for Nu Holdings and includes both credit card and
Slide 48: Non-IFRS Financial – Measures and Reconciliations
Non-IFRS Financial – Measures and Reconciliations Adjusted Net Income (Loss) is defined as profit (loss) attributable to shareholders of the parent company for the period, adjusted for the expenses and allocated tax effects on share-based compensation. Adjusted Net Income (Loss) is presented because
Slide 49: Non-IFRS Financial – Measures and Reconciliations
Non-IFRS Financial – Measures and Reconciliations As reported Nu Holdings - Consolidated For the three months ended March 31, Adjusted Net Income (Loss) (US$ million) 2023 2022 Profit (Loss) attributable to shareholders of the parent company 141.8 (45.1) Share-based compensation 65.2 77.7 Allocated
Slide 50: Non-IFRS Financial – Measures and Reconciliations
Non-IFRS Financial – Measures and Reconciliations Q4’22 Metrics adjusted by the CSA cancellation Nu Holdings - Consolidated For the three months ended December 31, 2022 As presented in the CSA termination As presented in the US$ million financial statements adjustment earnings presentation Net incom
Slide 51: Non-IFRS Financial – Measures and Reconciliations
Non-IFRS Financial – Measures and Reconciliations Equity and Annualized ROE US$ million Reconciliation Nu Holdings - Consolidated Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 FY21 FY22 Total equity at the end of the period 4,790.6 4,738.2 4,752.7 4,890.8 5,208.5 4,442.5 4,890.8 Net Income (Loss) for the period (45
Slide 52: Non-IFRS Financial – Measures and Reconciliations
Non-IFRS Financial – Measures and Reconciliations Equity and Annualized ROE US$ million Reconciliation Brazil - Consolidated Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 FY21 FY22 Total equity at the end of the period 822.4 1,037.5 1,482.5 1,694.5 2,047.8 756.7 1,694.5 Net Income (Loss) for the period (11.7) 24.7
Slide 53: Non-IFRS Financial – Measures and Reconciliations
Non-IFRS Financial – Measures and Reconciliations FX Neutral measures are prepared and presented to eliminate the effect of foreign exchange, or “FX,” volatility between the comparison periods, allowing management and investors to evaluate our financial performance despite variations in foreign curr
Slide 54: Non-IFRS Financial – Measures and Reconciliations
Non-IFRS Financial – Measures and Reconciliations FX Rates - On a monthly basis, Nu translates its subsidiaries figures from their individual functional currency into Nu Holdings functional currency, the U.S. Dollars ("US$"), following the requirements of IAS 21 "The Effects of Changes in Foreign Ex
Slide 55: www.investors.nu investors@nubank.com.br
www.investors.nu investors@nubank.com.br First Quarter 2023 Results 55