Nu Holdings Ltd. · NYSE:NU
Nu — Q2 2024 Earnings Presentation
47 slides from Nu's earnings presentation, Aug 13, 2024
Slide 1: Q2 2024 Earnings Presentation
Q2 2024 Earnings Presentation Aug 13, 2024 First Quarter Second Quarter 2024 2024 Results 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 One of the World's Largest Digital Banking Platforms
Continued Growth of One of the World's Largest Digital Banking Platforms Q2’24 Main Highlights Customers (MM) 104.5MM US$ 1.4BN 105 Customers +20.8M YoY Gross Profit +88% FXN YoY 99 94 56% of Adult Population of Brazil Gross Profit Margin 48% 89 83% Monthly Activity Rate US$ 487.3MM 79 84 Net Income
Slide 4: Nu Holdings' Profitability Momentum Continues
Nu Holdings’ Profitability Momentum Continues Despite its Significant Excess Capital, Nu Holdings reaches an ROE of 28% Financial Performance (US$MM) Metrics Q2’23 Q3'23 Q4'23 Q1’24 Q2’24 Revenues 1,869 2,137 2,405 2,736 2,849 YoY FXN 60% 53% 57% 64% 65% Gross Profit 782 915 1,143 1,182 1,359 Margin
Slide 5: Q2'24 Results
Q2'24 Results First Quarter Second Quarter 2024 2024 Results Results 5
Slide 6: Strong Customer Acquisition and Sustained Growth in Activity Rate
Strong Customer Acquisition and Sustained Growth in Activity Rate Customers YoY: +25% Customers (MM) Active Customers YoY: +27% Active Customers 68.8 73.8 78.0 82.6 87.2 (MM) 104.5 99.3 93.9 89.1 83.7 Activity Rate (%) 83.4% 83.1% 83.2% 82.8% 82.2% Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 First Quarter Second
Slide 7: Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion
Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion Active Customers Using NuAccount Number of Products Per Monthly ARPAC by Quarterly Cohort as their Primary Banking Account (%) Active Customer (US$ | FX Neutral) US$ month/ Avg. monthly ARPAC of US$11.2/month while mor
Slide 8: Sustained Revenue Growth Fueled by Customer Acquisition and ARPAC Expansion
Sustained Revenue Growth Fueled by Customer Acquisition and ARPAC Expansion ARPAC (US$) Revenues (US$MM) YoY: 30% YoY: 65% FXN FXN 8% 11.4 6% 11.2 12% 2,849 6% 10.6 FXN FXN 2,736 FXN 10.0 FXN 2,405 FXN 15% 9.3 6% FXN 13% FXN 13% 2,137 FXN 1,869 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q2'23 Q3'23 Q4'23 Q1'24 Q
Slide 9: Strong Performance for Both Credit Card and Lending Portfolios
Strong Performance for Both Credit Card and Lending Portfolios, with Lending Gaining More Relevance Over Time Total Portfolio (US$BN) Total Portfolio (%) Lending Credit Cards YoY: 49% Lending Credit Cards FXN Credit Card: 39% FXN Lending: 92% FXN 8% 19% 20% 20% 23% 24% 11% 19.6 FXN 18.9 14% FXN 18.2
Slide 10: Interest Earning Portfolio over Total Portfolio Continues to Surpass the Market
Interest Earning Portfolio over Total Portfolio Continues to Surpass the Market as Nu Expands Financial Products and Features Credit Card IEP Evolution Nu Interest Earning Installments Balance Nu Revolving Balance Nu Non-Interest Earning Balance (% of Total Receivables – Brazil Only) Market Interest
Slide 11: Sequential Increase of Secured and Unsecured Loan Origination
Sequential Increase of Secured and Unsecured Loan Origination Originations (R$BN) YoY: 78% Brazil Only BRL Unsecured Lending 6% BRL 13.0 Secured Lending 23% 12.3 6% BRL BRL 1.8 1.7 12% BRL 10.0 70% 11.2 22% BRL 8.9 233% 1.0 BRL 10.6 6% BRL Credit Yield 0.3 BRL (%) 7.3 200% 8.6 5% 9.0 18% BRL BRL 0.1
Slide 12: Robust Deposit Franchise Driven By Sustainable Volume Growth
Robust Deposit Franchise Driven By Sustainable Volume Growth and Cost of Deposits Evolution Linked to Nu’s Strategy in Mexico Deposits (US$BN) YoY: 64% Brazil FXN Mexico 16% FXN Colombia 5% 24.3 25.2 23.7 FXN 0.2 20% 12% FXN 1.0 119% 2.3 61% FXN 3.3 Cost of 19.1 FXN FXN 18.0 22.7 22.0 Deposits as a
Slide 13: Net Interest Income Expansion Driven by Growth of Interest Earning Portfolio
Net Interest Income Expansion Driven by Growth of Interest Earning Portfolio NII (US$MM) & NIM (%) YoY: 77% FXN 14% 1,718.1 21% 1,619.5 FXN FXN 13% 1,345.7 13% 1,195.0 FXN NIM (%) 1,046.8 FXN 19.8% 19.5% 18.8% 18.3% 18.3% Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Note 1: ‘NII’ stands for Net Interest Income and
Slide 14: Stable Cost to Serve Underscores Operating Leverage Potential
Stable Cost to Serve Underscores Operating Leverage Potential Cost to Serve per Active Customer (US$) YoY: 24% FXN Adjusted by one-off: 19% 4% 0% 8% 0.9 0.9 0.9 0.9 FXN FXN FXN 10% 0.8 FXN 5% FXN adjusted Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Note 1: Amounts are presented in US dollars and growth rates on a
Slide 15: Sustained Gross Profit Growth and Margin Expansion
Sustained Gross Profit Growth and Margin Expansion Gross Profit (US$MM) YoY: 88% FXN 1,359.4 23% FXN 1,143.2 4% 1,181.6 FXN 26% 16% 914.8 FXN Gross Profit Margin 782.0 FXN (%) 47.5% 47.7% 42.8% 43.2% 41.8% Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 First Quarter Second Quarter 2024 2024 Results Results 15 Note 1
Slide 16: Strong Track Record of Driving Operating Leverage as Business Scales
Strong Track Record of Driving Operating Leverage as Business Scales Efficiency 91.6% NII + F&C (US$MM) Costs (US$MM) Efficiency Ratio 75.8% 13% 2,183.5 72.7% 2,075.2 72.3% 16% FXN FXN 13% 1,799.3 65.6% FXN 12% 1,599.1 16% FXN 1,415.2 58.2% 11% FXN 55.1% FXN 1,178.5 1,043.0 22% 750.0 19% 22% 47.4% F
Slide 17: 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 $7 <$1 7.0% $25.2Bn Per Customer Monthly Avg. per Active Consumer Finance Deposits Customer Delinquenc
Slide 18: Driving Sustained Growth in Both Net Income and Adjusted Net Income
Driving Sustained Growth in Both Net Income and Adjusted Net Income Adjusted Net Income YoY: Net Income (US$MM) +131% Adj. Net Income (MM) 262.7 355.6 395.8 442.7 562.5 Adj. Net Income Margin (%) 14% 17% 17% 16% 20% YoY: 134% FXN 38% FXN 487.3 6% Net Income 360.9 FXN 378.8 Margin (%) 20% 34% 303.0 F
Slide 19: Q2'24 Credit Underwriting
Q2'24 Credit Underwriting First Quarter Second Quarter 2024 2024 Results Results 19
Slide 20: Delinquency Ratios Tracking Expectations
Delinquency Ratios Tracking Expectations 15-90 NPLs 90+ NPLs Brazil Consumer Credit Portfolio Brazil Consumer Credit Portfolio 6.2% 6.3% 7.0% 5.9% 5.6% 5.5% 6.1% 6.1% 5.0% 5.0% 5.1% 5.1% 5.2% 5.2% 4.4% 5.1% 5.1% 5.0% 4.2% 4.3% 4.9% 5.0% 4.7% 3.7% 4.5% 4.5% 3.4% 4.2% 4.1% 4.1% 3.1% 3.0% 3.7% 3.7% 3.7
Slide 21: Normalized Delinquency Ratios Illustrate the Impacts of Risk Expansions
Normalized Delinquency Ratios Illustrate the Impacts of Risk Expansions 15-90 NPLs 90+ NPLs Brazil Consumer Credit Portfolio Brazil Consumer Credit Portfolio Intentional risk Intentional risk expansion expansion Actual Without expansions 6.2% 6.3% 7.0% 5.9% 5.6% 5.5% 6.1% 6.1% 6.2% 5.0% 5.0% 5.1% 5.
Slide 22: NPL Ratios Over IEP Balance Imply Stable Credit Risk
NPL Ratios Over IEP Balance Imply Stable Credit Risk Through the Product Cycle 15-90 NPLs Over IEP Balance 90+ NPLs Over IEP Balance Brazil Consumer IEP Brazil Consumer IEP 36.8% 35.5% 28.8% 25.4% 19.9% 15.1% 14.3% 13.6% 14.1% 13.9% 13.0% 12.8% 12.1% 15.6% 12.1% 10.7% 10.4% 10.2% 14.1% 10.0% 8.4% 9.
Slide 23: RAM Demonstrates Increasing Economics Per Unit of Credit Risk
RAM Demonstrates Increasing Economics Per Unit of Credit Risk RAM Over Balance Brazil Consumer Credit Portfolio Intentional risk expansion Actual 21.8% Without expansions 19.6% 18.9% 15.7% 13.2% 14.1% 13.6% 12.7% 11.8% 11.7% 10.9% 10.3% 9.3% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'2
Slide 24: Risk-Adjusted NIM Expansion Demonstrates Effective Pricing for Marginal Risk
Risk-Adjusted NIM Expansion Demonstrates Effective Pricing for Marginal Risk Credit Loss Allowance & Risk Adj. NIM 41% 830.7 -2% FXN FXN 759.8 5% 590.4 FXN 627.5 -5% FXN 592.5 Risk Adj. NIM (%) 11.0% 10.2% 9.5% 9.0% 8.0% Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Note 1: ‘CLA’ stands for Credit Loss Allowance Ex
Slide 25: Wrapping up
Wrapping up First Second First Quarter Quarter Quarter 2024 2023 2024 Results Results Results 25
Slide 26: Unique Set of Attributes Capable of Transforming Nu into the Largest Consumer Technology Platform
Unique Set of Attributes Capable of Transforming Nu into the Largest Consumer Technology Platform in Latin America One of the most valuable and loved brands in Latin America, strengthened by one of the Brand largest NPS of any company in the region One of the largest consumer bases of Latin America,
Slide 27: The Strongest Technology and Product Teams in Latin America Paving the Way for Platform Shift
Brand Scale Data Talent Culture WIP The Strongest Technology and Product Teams in Latin America Paving the Way for Platform Shift Our talent competitive advantage will be critical to seize the AI opportunity First decade Unique in Latam Talent dedicated Proprietary and Best App and global footprint
Slide 28: Brand Equity Across Borders
Brand Scale Data Talent Culture Brand Equity Across Borders One of the most valuable and loved brands in Latin America, strengthened by: Trust Quality of Service Low Prices Mexico Deposits (US$MM) Colombia Fintec h 1 Fintec h 2 Fintec h 3 Fintec h 4 Nu Col Fintec h 1 Fintec h 2 Fintec h 3 Nu Me x 3,
Slide 29: Q&A
Q&A First Quarter Second Quarter 2024 2024 Results Results 29
Slide 30: Appendix
Second appendix 30 First Quarter Quarter 2024 2024 Results Results
Slide 31: Our Model Powers Our Earnings Generating Formula
Our Model Powers Our Earnings Generating Formula Rapidly Growing Increasing Revenue Low Cost Substantial Customer Base Per Customer Operating Platform Earnings Power ACTIVE CUSTOMERS ARPAC COST TO SERVE First Quarter Second Quarter 2024 2024 Results Results 31
Slide 32: A Business Model That Drives Multi-Product Growth
A Business Model That Drives Multi- Product Growth Active Active Consumer Credit Active Investments Pix and Boleto Financing Customers Card Customers Customers Active Customers 87.2MM 41.8MM 18.5MM 15.5MM + 27% YoY + 13% YoY + 78% YoY + 61% YoY Active Active Unsecured Active SME Active Insurance NuA
Slide 33: Purchase Volume Growth Remains Strong YoY
Purchase Volume Growth Remains Strong YoY Purchase Volume (US$BN) Purchase Volume per Customer (US$) $400 FXN US$ Prepaid/Debit Cards Credit Cards YoY: 29% month/ customer For constant risk mix analysis, please refer to Adj. Purchase Volume slide FXN $350 Credit Card: 28% FXN Prepaid/Debit Card: 29%
Slide 34: Consistent Growth and ARPAC Acceleration Across All Cohorts Adjusted By Constant Risk Mix
Consistent Growth and ARPAC Acceleration Across All Cohorts Adjusted By Constant Risk Mix Adj. Purchase Volume (US$) Adj. ARPAC (US$) per Customer $30 $500 FXN US$ FXN US$ month/ Brazil Only month/ Brazil Only customer customer $450 $25 $400 $350 $20 $300 $15 $250 $200 Q1’17 2017 $10 Q1’17 2017 $150
Slide 35: Comfortable Capital and Liquidity Positions
Comfortable Capital and Liquidity Positions Capital Position (US$Bn) Liquidity Position (US$Bn) Nu Holdings Cash & LDR 25.2 Equivalents 5.7 39% Capital Excess 1.7x Capital Requireme nt 2.4 3.3 9.8 1.5 1.5 1.8 1.8 Capital in our Geos Nu Holdings Interest Earning Portfolio Total Deposits First Quarter
Slide 36: Formation Ratios Tracking Expectations
Formation Ratios Tracking Expectations NPL Formation Stage 3 Formation Brazil Consumer Credit Portfolio Brazil Consumer Credit Portfolio Actual Without expansions 3.9% 4.2% 3.0% 3.2% 3.2% 3.3% 3.7% 2.9% 2.9% 2.9% 3.0% 3.0% 3.4% 3.4%3.3%3.4% 2.5% 2.6% 2.6% 3.1% 3.2% 3.1% 3.2% 2.9% 2.7% 2.6% 1.9%2.0%1
Slide 37: Coverage Ratios Reflect NPL Dynamics
Coverage Ratios Reflect NPL Dynamics Coverage Ratio Over Total Balance Coverage Ratio Over NPL 90+ Brazil Consumer Credit Portfolio Brazil Consumer Credit Portfolio 14.8% 14.4% 13.7% 13.5% 12.6% 262.6% 257.5% 263.9% 11.6% 242.5% 10.9% 10.6% 235.2% 222.2% 229.1% 213.3% 9.7% 238.0% 199.0% 9.1% 223.0%
Slide 38: Portfolio Growth Continues to be the Main Factor of Provision Balance Increase
Portfolio Growth Continues to be the Main Factor of Provision Balance Increase Provisions Bridge (US$MM, FXN) (110) 412 293600% 263400% 2,936 2,634 0% 0% Q1'24 ECL Growth Other Q2'24 ECL Note 1: The information presented is for Nu Holdings and includes both credit card and lending provision balance.
Slide 39: Loan Portfolio (FX Neutral) (1/2) Steady Credit Book Expansion
Loan Portfolio (FX Neutral) (1/2) Steady Credit Book Expansion Total Portfolio (FXN US$BN) YoY: 49% Lending FXN Credit Card IEP Lending: 92% FXN Credit Card IEP: 73% FXN Credit Card non-IEP Credit Card non-IEP: 25% FXN 8% 18.9 17.5 FXN 11% 14% 15.8 FXN 15% 4.6 13.9 FXN 25% 4.0 FXN 9% 12.7 FXN 14% 3.
Slide 40: Loan Portfolio (FX Neutral) (2/2) Steady Credit Book Expansion
Loan Portfolio (FX Neutral) (2/2) Steady Credit Book Expansion Total Portfolio (FXN US$BN) YoY: 49% Lending FXN Credit Card IEP Lending: 92% FXN Credit Card IEP: 73% FXN Credit Card non-IEP Credit Card non-IEP: 25% FXN 8% 18.9 17.5 FXN 11% 14% 15.8 FXN 15% 4.6 13.9 FXN 25% 4.0 FXN 9% 12.7 FXN 14% 3.
Slide 41: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations This presentation includes financial measures defined as “non-IFRS financial measures” by the SEC, including: Adjusted Net Income and certain FX Neutral measures and provides reconciliations to the most directly comparable IFRS financial measure. A non
Slide 42: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Adjusted Net Income As reported Nu Holdings - Consolidated For the three months ended June 30, Adjusted Net Income (US$ million) 2024 2023 Profit attributable to shareholders of the parent company 487.3 224.9 Share-based compensation 124.3 87.0 Allocat
Slide 43: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Q4’22 and FY22 Metrics adjusted by the CSA cancellation Nu Holdings - Consolidated December 31, 2022 As presented in the financial CSA termination As presented in the earnings US$ million statements adjustment presentation Net income (loss) – for the t
Slide 44: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Equity and Annualized ROE/Adjusted ROE US$ million Reconciliation - ROE Nu Holdings - Consolidated Q2'23 Q3'23 Q4’23 Q1’24 Q2’24 Total equity at the end of the period 5,644.6 5,889.3 6,406.4 6,802.7 6,923.4 Net Income for the period 224.9 303.0 360.9 3
Slide 45: 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 financial performance despite variations in foreign currency e
Slide 46: 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 Exch
Slide 47: www.investors.nu investors@nubank.com.br
www.investors.nu investors@nubank.com.br First Quarter Second Quarter 2024 2024 Results Results 47