Nu Holdings Ltd. · NYSE:NU
Nu — Q3 2022 Earnings Presentation
51 slides from Nu's earnings presentation, Aug 15, 2022
Slide 1: Q3 2022 Earnings Presentation
Q3 2022 Earnings Presentation November 14, 2022
Slide 2: Disclaimer
Disclaimer This presentation speaks at the date hereof, and Nu Holdings Ltd. (“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 third-party data included
Slide 3: Cutting Through The Cycles
Cutting Through The Cycles Continued growth of the world's largest digital banking platform Acquisition / M arketplace Q3’22 Results M obile Insurance M oney Boxes Easynvest Ultraviolet Q3’22 Results CC Bank Slip Pay BNPL FX Remittances 70.4MM PiX Financing Customers (+46% YoY) N uPay / N uC ripto A
Slide 4: A Business Model That Cuts Through Multiple Products
A Business Model That Cuts Through Multiple Products 63% 68% 48% 148% 279% 117% +1M 101% 57.4 6.2 0.8 31.8 1.3 1.3 MM MM 5.3 MM 49.2 MM MM MM 35.2 MM MM 21.5 0.4 MM 29.3 MM 2.5 MM 0.6 MM MM MM 1.4 MM 0.0 MM Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'22 Q3'21 Q3'
Slide 5: A Business Model That Cuts Through Multiple Geos
A Business Model That Cuts Through Multiple Geos GDP, Population (US$Tr,MM) Customer Count Growth Since Launch (1000 inhab. per capita) Colombia US$ 1.4Tr GDP 128MM People US$ 1.8Tr GDP US$ 0.2Tr GDP 215MM People Mexico 51MM People Brazil – Mar’14 Mexico – Jul’19 Brazil Colombia – Aug’20 Our Markets
Slide 6: A Business Model That Cuts Through Multiple Client Segments
A Business Model That Cuts Through Multiple Client Segments Distribution of Customers per Socioeconomic Class ARPAC US$/Month 54.2 High Income 8% 10% 8% 8% 11% 45.1 41.9 Middle Income 43% 45% 42% 50% 45% 33.4 Low Income 49% 50% 47% 44% 40% 7.9 Nu Bank 1 Bank 2 Bank 3 Bank 4 Note 1: ‘ARPAC’ stands fo
Slide 7: NPS Leadership Continues Indisputable After a Decade-Long Expansion
NPS Leadership Continues Indisputable After a Decade-Long Expansion NPS Indexed Nu Avg. Fintechs Avg. Incumbent Banks 1.00 1.00 1.00 0.54 0.57 0.56 0.48 0.51 0.25 Brazil Mexico Colombia Third Quarter 2022 Results 7 Note 1: ‘NPS’ stands for Net Promoter Score. Note 2: NPS Indexed (1=Nu’s). Note 3: NP
Slide 8: Superior Customer Engagement Levels Brings Multiple Additional Growth Vectors
Superior Customer Engagement Levels Brings Multiple Additional Growth Vectors DAU/MAU Evolution 51.9% 49.9% 50.3% 50.2% 47.9% 47.0% 41.8% 41.8% 40.3% 37.5% 35.1% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Third Quarter 2022 Results 8 Note 1: ‘DAU/MAU’ stands for Daily Active U
Slide 9: Q3 2022 Results
Q3 2022 Results
Slide 10: Our Model Powers Our Earnings Generating Formula
Our Model Powers Our Earnings Generating Formula Rapidly Growing Increasing Revenue Low Cost Substantial Customer Base Per Customer Operating Platform Earnings Power ACTIVE CUSTOMERS ARPAC COST TO SERVE Third Quarter 2022 Results 10
Slide 11: Strong Customer Acquisition and Activity Rate Improvement Continue
Strong Customer Acquisition and Activity Rate Improvement Continue Total Customers (MM) Active Customers 35.2 41.1 46.5 52.3 57.4 (MM) Activity YoY: 46% Rate Active Customers YoY: 63% 70.4 (%) 65.3 59.6 82% 53.9 48.1 80% 78% 76% 73% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Third Quarter 2022 Results 11 Note 1:
Slide 12: Compounding Effect of Engagement and Cross-sell Driving ARPAC Expansion
Compounding Effect of More Engagement And More Cross-sell Driving ARPAC Expansion Active Customers Using NuAccount as their Monthly ARPAC by Quarterly Cohort Primary Banking Account (%) Number of Products Per Active Customer US$ (US$ | FX Neutral) month/ 70% Jan-22 Jan-21 Jan-20 Jan-19 Jan-18 Jan-17
Slide 13: Triple-digit Revenue Growth Sustained by Customer Growth and ARPAC Expansion
Triple-digit Revenue Growth Sustained by Customer Growth and ARPAC Expansion ARPAC (US$) Revenues (US$MM) YoY: 171% YoY: 61% FXN 1,307 FXN 7.8 7.9 1,158 6.7 5.6 877 4.9 636 481 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: Amounts are presented in US dollars and growth rates on
Slide 14: Customer Addition and Rising Limits Driving Purchase Volume
Compounding Effect of Customer Addition and Rising Limits Driving Purchase Volume Purchase Volume (US$Bn) Purchase Volume per Customer FXN US$ month/ YoY: 75% customer $350 FXN 20.0 21.2 Credit Card: 62% FXN Prepaid Card: 105% FXN $300 15.9 7.6 6.9 14.4 $250 12.1 5.3 13.6 $200 4.8 13.1 3.7 10.6 $150
Slide 15: Strong Loan Growth, Despite FX Devaluation
Strong Loan Growth, Despite FX Devaluation and Stable Personal Loan Origination Total Portfolio (US$Bn) Total Portfolio (%) Credit Card Personal Loans YoY: 83% FXN 17% Credit Card: 77% FXN 23% 21% 20% Personal Loans: 111% FXN 9.7 21% 9.1 8.8 1.9 2.0 2.0 6.6 5.3 1.4 0.9 83% 79% 79% 80% 77% 7.8 6.8 7.
Slide 16: Gap to the Market on Interest Earning Portfolio Narrows
Gap to the Market on Interest Earning Portfolio (IEP) Narrows as Nu Expands Financing Features Credit Card IEP Evolution (as % of Receivables) Nu Installments IEP CC Balance Nu Revolving CC Balance Nu Non-IEP Balance Mkt Intallments IEP CC Balance Mkt Revolving CC Balance Mkt Non-IEP Balance 43% 41%
Slide 17: Sustained Tighter Credit Conditions on Personal Loans
Sustained Tighter Credit Conditions on Personal Loans During the Quarter Origination (R$Bn) EOP avg. rate YoY: 39% BRL 4.9 4.8 4.5 4.6 5.6% 5.5% 3.3 4.2% 3.9% 4.0% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Third Quarter 2022 Results 17 Note 1: Amounts are presented in BRL. Note 2: Rates presented are the origin
Slide 18: Deposits Grow Despite Money Boxes Ramp-Up, Funding Cost Declines
Deposits Grow Despite Money Boxes Ramp-Up, While Funding Cost Gradually Declines Deposits (US$Bn) Money Boxes Evolution (since launch) Cost of Funding as Money Boxes Percentage Active Customers 2 0 0 0 3 5 0 0 0 0 of CDI (%) YoY: 73% (MM) 1.7 FXN 1.6 1 8 0 0 0 14.0 AuM (US$ MM) 1.6 3 0 0 0 0 13.3 1
Slide 19: NIM Expected to Continue Expanding
NIM Expected to Continue Expanding as Loans Outpace Deposits and Funding Cost is Optimized NII & NIM 11.1% NII (US$ MM) NIM (%) 9.7% 8.3% 8.5% 7.7% 527.3 445.5 346.4 262.6 193.6 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: ‘NII’ (Net Interest Income) is calculated as Interest income and gains (losses) on f
Slide 20: Cost to Serve Remains Stable Implying Scale Benefits
Cost to Serve Remains Stable Implying Scale Benefits Cost to Serve per Active Customer (US$) YoY: 0% FXN 0.9 0.8 0.8 0.8 0.7 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: Amounts are presented in US dollars and growth rates on an FX Neutral basis. For additional detail on calculations please refer to the ap
Slide 21: Gross Profit Margin Expansion After Sequential Compressions
Gross Profit Margin Expansion After Sequential Compressions Gross Profit (US$MM) Gross Margin 47% 36% 34% 31% 33% YoY: 90% FXN 427.0 363.5 294.1 223.9 226.9 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Third Quarter 2022 Results 21 Note 1: Amounts are presented in US dollars and growth rates on an FX Neutral basis
Slide 22: Improving Operating Leverage as Business Continues to Scale
Improving Operating Leverage as Business Continues to Scale Efficiency NII + F&C (US$MM) Costs (US$MM) Efficiency Ratio Efficiency Ratio Ex. SBC 91.6% 847.0 750.0 604.2 75.8% 72.7% 72.3% 459.0 68.6% 379.5 65.6% 278.9 60.7% 213.3 57.4% 58.2% 56.1% 55.1% 52.7% 50.2% (195.3) (202.7) 45.8% (274.3) (347.
Slide 23: Sequential Improvement in Adjusted Net Income
Sequential Improvement in Adjusted Net Income Adj. Net Income (US$MM) Net Income (Loss) (34.3) (66.3) (45.1) (29.9) 7.8 63.1 17.0 3.2 10.1 (1.2) Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Third Quarter 2022 Results 23 Note 1: For additional detail on calculations please refer to the appendix Non-IFRS Financial m
Slide 24: Best-In-Class Cost Structure is a Key Long-term Strategic Differential
Best-In-Class Cost Structure is a Key Long-term Strategic Differential The Four Cost Pillars of Retail Financial Services COST TO ACQUIRE COST TO SERVE COST OF RISK COST OF FUNDING $6 $0.8 4.7% $14.0Bn per Customer Monthly Avg. per Active Consumer Finance Deposits Customer Delinquency Rate ~$2 ~85%
Slide 25: Q3 2022 Credit Underwriting
Q3 2022 Credit Underwriting
Slide 26: Delinquency Continued to Increase Following Macro Trends
Delinquency Continued to Increase Following Macro Trends 15-90 NPLs 90+ NPLs 6.2% 5.3% 5.0%6.2% 5.1% 4.2% 5.6% 4.4% 3.4% 5.2%3.9% 3.9% 3.1%3.0% 5.0%4.9%5.1% 5.1%5.1%5.1%5.0% 5.0% 3.6% 3.0% 3.7% 3.6% 4.7% 2.6%2.5% 3.7% 4.5% 3.1%3.2% 2.5% 2.6% 2.4% 2.6% 4.1% 2.3% 2.2%3.4%2.2% 2.2%2.3% 3.4% 3.7% 3.0%2.
Slide 27: Superior Credit Underwriting Across All Income Bands For Credit Cards
Nu Has Shown Superior Credit Underwriting Across All Income Bands For Credit Cards NPL 90+ By Income Band Defined by Minimum Wage (MW) <1x MW 1x to 2x MW 2x to 3x MW Balance Breakdown 9.1% 6.7% 2% 12.9% 13.2% 5% 13% 8.3% 8.8% 14% 5.3% 13% 4.7% 6.5% 5.8% 5.7% 22% 5.5% 19% Jan-19 Jan-19 Oct-19 Jul-20
Slide 28: Superior Credit Underwriting Across All Income Bands For Consumer Finance
Nu Has Shown Superior Credit Underwriting Across All Income Bands For Consumer Finance NPL 90+ By Income Band BASED ON INTERNAL ESTIMATES Defined by Minimum Wage (MW) <1x MW 1x to 2x MW 2x to 3x MW Balance Breakdown 14.0% 13.8% 2% 10.5% 4% 14% 8.3% 8.8% 13% 6.7% 13% 8.7% 7.8% 22% 6.4% 5.5% 5.8% 5.3%
Slide 29: Risk-Adjusted NIM Improvement Shows Adequate Pricing for Credit Risk
Risk-Adjusted NIM Improvement Shows that Nu is Adequately Pricing for Credit Risk CLA & Risk Adj. NIM 3.2% CLA (US $ MM) Risk Adj NIM (%) 2.6% 2.3% 2.1% 2.0% 1.7% 375.2 1.3% 338.5 275.7 199.7 127.0 71.3 82.7 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: ‘CLA’ stands for Credit Loss Allowance Exp
Slide 30: High Growth & Profitability Best-in-class
Wrapping up... PROFITABILTY NPS MARKET High Growth & Best-in-class Market Leader Profitability UX in LatAm Revenues +171% FXN YoY 2x NPS vs the industry #1 card issuer Net Income of across all markets 6th largest player US$ 7.8MM Driving sustainable competitive advantages against both incumbents and
Slide 31: Q&A
nu Q&A
Slide 32: Appendix
Appendix Third Quarter 2022 Results 32
Slide 33: Strong Capital and Liquidity Position to Navigate the Cycle
Strong Capital and Liquidity Position to Navigate the Cycle Capital Position (US$Bn) Liquidity Position (US$Bn) Capital Excess Nu Holdings Cash & Equivalents Total 3.8 LDR 25% ~5x ~4x 2.8 14.0 1.0 0.8 0.2 0.2 0.3 0.8 0.8 3.5 0.5 NuFIN Capital Position Prudential Conglomerate Nu Holdings Interest Ear
Slide 34: NPL Formation Increasing Following Macro Trends
NPL Formation Increasing Following Macro Trends NPL Formation 2.9% 2.9% 3.0% 2.5% 2.6% 2.6% 1.9% 2.0% 1.9% 2.1% 1.8% 1.7% 1.6% 1.6% 1.6% 1.1% 2.2% 0.9% 0.4% Consumer Finance Consumer Finance – Q4’19 constant product mix Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3
Slide 35: Evolution of Coverage Ratios
Evolution of Coverage Ratios Coverage Ratio Over Total Balance Coverage Ratio Over NPL 90+ 263% 264% 257% 10.6% 242% 238% 235% 9.7% 223% 9.0% 9.1% 8.8%8.7% 8.6% 199% 7.9% 8.1% 7.7% 7.8% 7.5% 180% 7.4% 7.2% 9.3% 173%175%170% 151% 6.6%6.3% 6.2% 6.0% 139% 185% 5.5% 123% 121% 118% 113% 110% Consumer Fin
Slide 36: Credit Card: Superior Asset Quality Even Adjusted by Growth
Credit Card: Superior Asset Quality Even Adjusted by Growth LAGGED NPL 90+ By Income Band Defined by Minimum Wage (MW) <1x MW 1x to 2x MW 2x to 3x MW Balance Breakdown 16.2% 15.8% 2% 12.2% 11.7% 10.8% 5% 13% 8.5% 12.1% 14% 9.9% 13% 8.2% 7.5% 6.8% 5.9% 22% 19% Jan-20 Aug-20 Mar-21 Oct-21 May -22 Jan-
Slide 37: Consumer Finance: Superior Asset Quality Even Adjusted by Growth
Consumer Finance: Superior Asset Quality Even Adjusted by Growth LAGGED NPL 90+ By Income Band BASED ON INTERNAL ESTIMATES Defined by Minimum Wage (MW) <1x MW 1x to 2x MW 2x to 3x MW Balance Breakdown 17.4% 16.3% 2% 12.2% 12.3% 11.7% 4% 14% 8.5% 13.2% 13% 12.3% 10.5% 9.4% 13% 8.4% 6.0% 22% 19% Jan-1
Slide 38: Portfolio Growth Remains Strong on an FX Neutral Basis
Portfolio Growth Remains Strong on an FX Neutral Basis Total Portfolio (US$Bn, FX Neutral) Credit Card Personal Loans YoY: 83% FXN 9.7 Credit Cards: 77% FXN Personal Loans: 111% FXN 8.8 7.9 1.9 7.0 1.9 1.8 5.5 1.5 0.9 7.8 7.0 6.1 5.5 4.5 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Third Quarter 2022 Results 38 No
Slide 39: Triple-digit Revenue Growth Sustained by Customer Growth and ARPAC Expansion
Triple-digit Revenue Growth Sustained by Customer Growth and ARPAC Expansion ARPAC (US$, FX Neutral) Revenues (US$MM, FX Neutral) YoY: 171% YoY: 61% FXN 1,307 FXN 7.9 7.6 1,098 5.7 5.8 846 4.9 679 482 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: Amounts and growth rates are pr
Slide 40: Customer Addition and Rising Limits Driving Purchase Volume
Compounding Effect of Customer Addition and Rising Limits Driving Purchase Volume Purchase Volume (US$Bn, FX Neutral) YoY: 75% 21.2 FXN 19.0 Credit Card: 62% FXN Prepaid Card: 105% FXN 7.6 15.4 15.3 6.6 12.1 5.2 5.1 13.6 12.4 3.7 10.2 10.2 8.4 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: Amounts and growth
Slide 41: NIM Expected to Continue Expanding as Loans Outpace Deposits
NIM Expected to Continue Expanding as Loans Outpace Deposits and Funding Cost is Optimized NII & NIM (US$ MM, FX Neutral) 11.1% NII (US$ MM) NIM (%) 9.3% 9.5% 8.6% 7.6% 527.3 422.7 333.9 280.3 194.0 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: ‘NII’ (Net Interest Income) is calculated as Interest income an
Slide 42: Cost to Serve Remains Stable Implying Scale Benefits
Cost to Serve Remains Stable Implying Scale Benefits Cost to Serve per Active Customer (US$, FX Neutral) YoY: 0% FXN 0.9 0.8 0.8 0.8 0.6 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Note 1: Amounts and growth rates are presented on an FX Neutral basis. For additional detail on calculations please refer to the appe
Slide 43: Gross Profit Margin Expansion After Sequential Compressions
Gross Profit Margin Expansion After Sequential Compressions Gross Profit (US$MM, FX Neutral) Gross Margin 47% 36% 34% 31% 33% YoY: 90% FXN 427.0 344.9 283.5 242.2 224.4 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Third Quarter 2022 Results 43 Note 1: Amounts and growth rates are presented on an FX Neutral basis.
Slide 44: Portfolio Growth Continues to be the Main Driver of Provision Balance Increase
Portfolio Growth Continues to be the Main Driver of Provision Balance Increase Provision Balance Bridge (US$MM, FX Neutral) 15 169 1,126 1,111 942 Q2 ECL Growth Other Q3 ECL Note 1: The information presented is for Nu Holdings and includes both credit card and personal loans provision balance. Note
Slide 45: Nu is in the Sweet-spot of Demographics
Nu is in the Sweet-spot of Demographics Age Distribution Income Distribution Brazil 15% 20% 19% 17% 28% Brazil 37% 33% 14% 9% 5% NU 23% 33% 13% 23% 8% NU 21% 35% 20% 15% 6% 18-25 26-35 36-45 46-55 56+ <= 1 MW 1-2 MW 2-3 MW 3-5 MW 5-10 MW 10-20 MW >20 MW Third Quarter 2022 Results 45 Note 1: ‘MW; ref
Slide 46: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Adjusted Net Income (Loss) is defined as profit (loss) attributable to shareholders of the parent company for the period, adjusted for expenses and allocated tax effects on share-based compensation in such period. Adjusted Net Income (Loss) is presente
Slide 47: Non-IFRS Adj. Net Income Reconciliations
Non-IFRS Adj. Net Income Reconciliations As reported For the three months ended September 30, 2022 2022 2021 2020 Adjusted Net Income (Loss) (em US$ milion) Profit (Loss) attributable to shareholders of the parent company 7.8 (34.2) (32.6) Share-based compensation 78.9 43.9 13.3 Allocated Tax Effect
Slide 48: 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 curren
Slide 49: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations FX Neutral measures for deposits and interest-earning portfolio were calculated by multiplying the as reported amounts as of September 30, 2021, by the spot Brazilian reais/U.S. dollars exchange rates as of this date (R$5.4429 to US$1.00), and using su
Slide 50: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations As of July 31, 2022, income statement figures were divided by the average FX Rate of the month (R$ 5.3687, MXN 20.5260 and COP 4.395,2275 to US$ 1.00) and balance sheet figures were divided by the last price FX rate of the month (R$ 5.1733, MXN 20,3672
Slide 51: www.investors.nu investors@nubank.com.br
www.investors.nu investors@nubank.com.br