Nu Holdings Ltd. · NYSE:NU
Nu — Q2 2023 Earnings Presentation
50 slides from Nu's earnings presentation, Aug 15, 2023
Slide 1: Q2 2023 Earnings Presentation
Q2 2023 Earnings Presentation August 15, 2023 Second 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 85MM July’23 83.7MM 90.0 Open Finance 83.7 Customers +18.4MM YoY SME 1st 79.1 Customers 80.0 Street Mode 74.6 49% of Adult Population of Brazil 70.4 Ultraviolet 70 .0 CC Bank Slip Pay 65.3 82% Monthly Activity Rate PIX BNPL 59.6 Cognit
Slide 4: Continued Compounding of Growth, with Meaningful Shift to Profitability
Continued Compounding of Growth, with Meaningful Shift to Profitability Customers (MM) Revenues (US$ MM) Gross Profit (US$ MM) Net Income (Loss) (US$ MM) CAGR: 42% CAGR: 130% CAGR: 111% 53% QoQ FXN FXN FXN 83.7 1,868.6 79.1 782.0 224.9 2.0x 74.6 5.3 x 1,618.7 4.5x 70.4 65.3 1,450.5 650.9 59.6 1,306.
Slide 5: A Business Model That Drives Multi-Product Growth
A Business Model That Drives Multi- Product Growth Active Active Credit NuInvest Active C NuCripto Active Customers Card Customers Customers Customers 68.8MM 37.1MM 10.4MM 1.3MM + 32% YoY + 27% YoY + 121% YoY + 160% YoY Active Active Personal Active SME Active Insurance NuAccounts Loan Customers Acc
Slide 6: Nu Holdings' Profitability Momentum Continues
Nu Holdings’ Profitability Momentum Continues Adjusted annualized ROE approaches 20% Financial Performance (US$M) Metrics Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Revenues 877 1,158 1,307 1,451 1,619 1,869 YoY FXN 226% 230% 171% 112% 87% 60% Gross Profit 294 364 427 578 651 782 Margin 34% 31% 33% 40% 40%
Slide 7: Q2'23 Results
Q2’23 Results Second Quarter 2023 Results 7
Slide 8: Our Model Powers Our Earnings Generating Formula
Our Model Powers Our Earnings Generating Formula Rapidly Growing Increasing Revenue Low Cost Substantial Customer Base Per Customer Operating Platform Earnings Power ACTIVE CUSTOMERS ARPAC COST TO SERVE Second Quarter 2023 Results 8
Slide 9: Strong Customer Acquisition and Sustained Growth in Activity Rate
Strong Customer Acquisition and Sustained Growth in Activity Rate Customers YoY: +28% Customers (MM) Active Customers YoY: +32% Active Customers 52.3 57.4 61.2 64.9 68.8 (MM) 83.7 79.1 74.6 70.4 65.3 Activity Rate 82.1% 82.2% (%) 81.9% 81.6% 80.2% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Second Quarter 2023 Re
Slide 10: Compounding Effect of Engagement and Cross-sell Driving ARPAC Expansion
Compounding Effect of More Engagement And More Cross-sell Driving ARPAC Expansion Active Customers Using NuAccount Number of Products Per Monthly ARPAC by Quarterly Cohort as their Primary Banking Account (%) Active Customer (US$ | FX Neutral) US$ month/ Avg. monthly ARPAC of $9.3/month while some 7
Slide 11: Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion
Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion ARPAC (US$) Revenues (US$MM) YoY: 18% YoY: 60% FXN FXN 9.3 1,869 8.6 7.9 8.2 1,619 7.8 1,451 1,307 1,158 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note 1: Amounts are presented in US dollars and growth rates on
Slide 12: Customer Growth and Higher Limits Amplifying Purchase Volume
Compounding Effect of Customer Growth and Higher Limits Amplifying Purchase Volume Purchase Volume (US$BN) Purchase Volume per Customer (US$) Prepaid Cards YoY: 30% FXN US$ month/ customer Credit Cards FXN $300 Credit Card: 30% FXN Prepaid Card: 31% FXN 26.3 $250 23.8 23.3 21.2 20.0 9.2 $200 8.7 8.2
Slide 13: Strong Performance for Both Credit Card and Personal Loan Portfolios
Strong Performance for Both Credit Card and Personal Loan Portfolios Total Portfolio (US$BN) Total Portfolio (%) Personal Loans YoY: 48% Personal Loans Credit Cards FXN Credit Cards Credit Card: 54% FXN Personal Loans: 33% FXN 14.8 21% 20% 18% 18% 19% 12.8 2.8 11.3 2.3 9.7 2.0 9.1 1.9 2.0 79% 80% 82
Slide 14: Gap to the Market on Interest Earning Portfolio Closes
Gap to the Market on Interest Earning Portfolio (IEP) Closes as Nu Expands Financing Features Credit Card IEP Evolution Nu Interest Earning Installments Balance Nu Revolving Balance Nu Non-Interest Earning Balance (% of Total Receivables) Market Interest Earning Installments Balance Market Revolving
Slide 15: Personal Loan Origination Levels Accelerated Sequentially
Personal Loan Origination Levels Accelerated Sequentially Origination (R$BN) YoY: 53% BRL 7.3 6.3 4.8 5.0 Credit 4.6 Yield (%) 5.7% 6.1% 5.6% 5.5% 5.3% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Second Quarter 2023 Results 15 Note 1: Amounts are presented in BRL Note 2: Credit Yield is the average rate of the lo
Slide 16: Robust Deposits Franchise as Volume Grows and Funding Cost is Kept Stable
Robust Deposits Franchise as Volume Grows and Funding Cost is Kept Stable Deposits (US$BN) YoY: 23% FXN 18.0 15.8 15.8 13.3 14.0 Cost of Funding as a % of CDI 98% 95% 78% 81% 80% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Second Quarter 2023 Results 16 Note 1: Amounts are presented in US dollars and growth rates
Slide 17: NIM Expanded Sequentially Driven by Rising IEP and Loan-to-Deposit Ratio
NIM Expanded Sequentially Driven by Rising Interest Earning Portfolio (IEP) and Loan-to-Deposit Ratio NII (US$MM) & NIM (%) YoY: 133% FXN 1,047 18.3% 815 NIM 688 15.7% (%) 527 446 13.5% 11.1% 9.7% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note 1: ‘NII’ (Net Interest Income) is calculated as Interest income and
Slide 18: Stable Cost to Serve Underscores Operating Leverage Potential
Stable Cost to Serve Underscores Operating Leverage Potential Cost to Serve per Active Customer(US$) YoY: (11)% FXN 0.9 0.8 0.8 0.8 0.8 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note 1: Amounts are presented in US dollars and growth rates on an FX Neutral basis. For additional detail on calculations please refe
Slide 19: Gross Profit Growth Path Remains Strong and Margin Expansion Continues
Gross Profit Growth Path Remains Strong and Margin Expansion Continues Gross Profit (US$MM) YoY: 113% FXN 782.0 650.9 578.3 Gross Profit Margin 41.8% (%) 40.2% 427.0 39.9% 363.5 32.7% 31.4% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Second Quarter 2023 Results 19 Note 1: Amounts are presented in US dollars and g
Slide 20: Improving Operating Leverage as Business Scales
Improving Operating Leverage as Business Scales Efficiency 91.6% NII + F&C (US$MM) Costs (US$MM) Efficiency Ratio Efficiency Ratio Ex. SBC 75.8% 72.7% 72.3% 1,415.2 68.6% 65.6% 1,178.5 60.7% 1,043.0 57.4% 58.2% 56.1% 52.7% 55.1% 750.0 604.2 50.2% 847.0 459.0 47.4% 379.5 45.8% 213.3 278.9 41.0% 39.0%
Slide 21: Sequential Improvement in Both Net Income and Adjusted Net Income
Sequential Improvement in Both Net Income and Adjusted Net Income Net Income (US$MM) YoY: 15x Net Income (Loss) FXN Adj. Net Income (Loss) 262.7 182.4 113.8 224.9 63.0 141.8 17.0 58.0 7.8 (29.9) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Second Quarter 2023 Results 21 Note 1: Amounts are presented in US dollars
Slide 22: 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 5.9% $18.0Bn Per Customer Monthly Avg. per Active Consumer Finance Deposits Customer Delinquenc
Slide 23: Q2'23 Credit Underwriting
Q2’23 Credit Underwriting Second Quarter 2023 Results 23
Slide 24: Delinquency Ratios Tracking Expectations
Delinquency Ratios Tracking Expectations 15-90 NPLs 90+ NPLs 6.6% 6.2% 6.0% 5.6% 6.2% 5.3% 5.0% 5.1% 5.9% 5.6% 5.5% 4.4% 4.3% 4.4% 4.2% 5.1% 5.2% 5.2% 5.0% 5.1% 5.1% 5.1% 5.0% 5.0% 3.7% 4.9% 3.9% 3.9% 4.7% 3.7% 3.7% 3.6% 3.6% 3.4% 4.5% 3.1% 3.0% 3.0% 3.1% 3.2% 4.1% 3.9% 3.9% 3.7% 2.5% 2.6% 2.6% 2.5%
Slide 25: Superior Credit Underwriting Across Income Bands for Credit Cards
Nu has Shown Superior Credit Underwriting Across Income Bands for Credit Cards NPL 90+ By Income Band Nu % Adult Population Defined by Minimum Wage (MW) Market <1x MW 34% 1x to 2x MW 38% 2x to 3x MW 11% 15.0% 12.0% 10.8% 8.3% 8.8% 6.7% 8.0% 7.6% 6.7% 5.5% 5.8% 5.3% Jan 19 Jun 23 Jan 19 Jun 23 Jan 19
Slide 26: Sequential Risk-Adjusted NIM Improvement Shows Effective Pricing for Risk
Sequential Risk-Adjusted NIM Improvement Shows Effective Pricing for Risk Credit Loss Allowance & Risk Adj. NIM 590 8.0% 475 415 Risk Adj. NIM 375 6.6% (%) 339 5.4% 3.2% 2.3% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note 1: ‘CLA’ stands for Credit Loss Allowance Expenses. Note 2: ‘Risk Adj. NIM’ stands for Ris
Slide 27: Wrapping Up
Wrapping Up Second Quarter 2023 Results 27
Slide 28: Main Product Launches
Main Product Launches Secured Lending CuentaNu • Mexico Other Relevant Launches Payroll Lending & Investment Backed Loans Prepaid Account Investments: i) Tesouro Direto ii) NuLimite Garantido iii) CDB Nubank FGTS Backed Loan Prepaid Card Insurance: i) Parcela Segura ii) Vidas Juntas R$ 600Bn-plus Ou
Slide 29: Q&A
Q&A Second Quarter 2023 Results 29
Slide 30: Appendix
appendix 30 Second Quarter 2023 Results
Slide 31: Capital and Liquidity Positions
Capital and Liquidity Positions Capital Position (US$Bn) Liquidity Position (US$Bn) Nu Holdings Cash & Equivalents Capital Excess 4.4 Capital Requirement LDR 35% 3x 2x 2.4 2.0 18.0 1.6 0.7 0.7 0.7 6.3 1.3 1.3 0.9 NuFIN Capital Position Prudential Conglomerate Nu Holdings Interest Earning Portfolio T
Slide 32: Evolution of Formation Ratios
Evolution of Formation Ratios NPL Formation Stage 3 Formation 3.0% 3.2% 3.2% 2.9% 2.9% 2.9% 3.4% 3.3% 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% 2.8% 2.3% 1.6% 1.6% 1.6% 1.9% 2.0% 1.9% 2.0% 2.0% 1.9% 2.9% 1.6% 1.7% 1.1% 0.9% 1.1% 0.9% 0.4% 0.4% Consumer Finance C
Slide 33: Evolution of Coverage Ratios
Evolution of Coverage Ratios Coverage Ratio Over Total Balance Coverage Ratio Over NPL90+ 12.6% 262.6% 263.9% 257.5% 11.6% 242.5% 12.6% 238.0% 235.2% 10.6% 10.9% 223.0% 213.9% 9.7% 208.6%213.3% 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% 194.1% 7.4% 7.5% 7.
Slide 34: Superior Credit Underwriting Across Income Bands for Consumer Finance
Nu has Shown Superior Credit Underwriting Across Income Bands for Consumer Finance NPL 90+ By Income Band Nu % Adult Population Defined by Minimum Wage (MW) Market BASED ON INTERNAL ESTIMATES <1x MW 34% 1x to 2x MW 38% 2x to 3x MW 11% 14.9% 12.9% 11.9% 8.3% 8.8% 6.7% 9.4% 9.1% 8.0% 5.5% 5.8% 5.3% Ja
Slide 35: Credit Card: Superior Asset Quality Even Adjusted by Growth
Credit Card: Superior Asset Quality Even Adjusted by Growth LAGGED NPL 90+ By Income Band Nu % Adult Population Defined by Minimum Wage (MW) Market <1x MW 34% 1x to 2x MW 38% 2x to 3x MW 11% 15.5% 12.9% 11.7% 10.4% 8.3% 8.5% 10.8% 9.4% 8.2% 7.1% 5.5% 5.9% Jan 20 Jun 23 Jan 20 Jun 23 Jan 20 Jun 23 3x
Slide 36: Consumer Finance: Superior Asset Quality Even Adjusted by Growth
Consumer Finance: Superior Asset Quality Even Adjusted by Growth LAGGED NPL 90+ By Income Band Nu % Adult Population Defined by Minimum Wage (MW) Market BASED ON INTERNAL ESTIMATES <1x MW 34% 18.1% 1x to 2x MW 38% 2x to 3x MW 11% 15.6% 12.2% 11.7% 11.4% 13.0% 12.7% 8.5% 12.3% 8.4% 8.4% 6.0% Jan 20 J
Slide 37: Evolution of Credit on an FX Neutral Basis
Evolution of Credit on an FX Neutral Basis Total Portfolio (US$Bn, FX Neutral) Personal Loans YoY: 48% Credit Cards FXN 14.8 13.5 12.4 2.8 2.5 11.0 2.2 10.0 2.2 2.1 12.0 11.1 10.2 8.8 7.8 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Credit Cards: 54% FXN | Personal Loans: 33% FXN Second Quarter 2023 Results 37 Not
Slide 38: Strong Unit Economics Across All Credit Portfolios
Strong Unit Economics Across All Credit Portfolios Credit Cards Cumulative Gross Profit Margin Personal Loans Cumulative Gross Profit Margin (as % of Revenues minus cost of funding) (as % of Revenues minus cost of funding) 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 1 5 9 13 17 21 25 29 33 37 41
Slide 39: Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion
Solid Revenue Growth Sustained by Customer Addition and ARPAC Expansion ARPAC (US$, FX Neutral) Revenues (US$MM, FX Neutral) YoY: 18% YoY: 60% FXN FXN 9.3 1,868.6 8.6 8.9 8.4 1,678.3 7.9 1,530.9 1,390.1 1,168.0 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note 1: Amounts and growth ra
Slide 40: Customer Growth and Higher Limits Amplifying Purchase Volume
Compounding Effect of Customer Growth and Higher Limits Amplifying Purchase Volume Purchase Volume (US$Bn, FX Neutral) YoY: 30% Prepaid Cards Credit Cards FXN 26.3 25.2 24.2 22.5 20.2 9.2 9.1 8.5 8.0 7.0 16.0 15.7 17.1 13.2 14.5 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Prepaid Card: 55% FXN | Credit Card: 44%
Slide 41: Stable Cost to Serve Underscores Operating Leverage Potential
Stable Cost to Serve Underscores Operating Leverage Potential Cost to Serve per Active Customer (US$, FX Neutral) YoY: (11)% FXN 0.9 0.9 0.9 0.9 0.8 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note 1: Amounts and growth rates are presented on an FX Neutral basis. For additional detail on calculations please refer
Slide 42: Gross Profit Growth Path Remains Strong and Margin Expansion Continues
Gross Profit Growth Path Remains Strong and Margin Expansion Continues Gross Profit (US$MM, FX Neutral) YoY: 113% FXN 782.0 674.9 610.3 42.1% 40.2% 454.2 39.9% 366.8 32.7% 31.4% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Second Quarter 2023 Results 42 Note 1: Amounts and growth rates are presented on an FX Neutr
Slide 43: 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$MM, FXN) 74 231 188500% 172800% 2,033 1,728 0% 0% Q1'23 ECL Growth Risk Q2'23 ECL Second Quarter 2023 Results 43 Note 1: The information presented is for Nu Holdings and includes both credit card and
Slide 44: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations This presentation includes financial measures defined as “non-IFRS financial measures” by the SEC, including: Adjusted Net Income and certain FX Neutral measures and provides reconciliations to the most directly comparable IFRS financial measure. A non
Slide 45: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Adjusted Net Income As reported Nu Holdings - Consolidated For the three months ended June 30, Adjusted Net Income (US$ million) 2023 2022 Profit (Loss) attributable to shareholders of the parent company for the period 224.9 (29.9) Share-based compensa
Slide 46: 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 financial CSA termination As presented in the earnings US$ million statements adjustment presentation Net income
Slide 47: Non-IFRS Financial Measures and Reconciliations
Non-IFRS Financial Measures and Reconciliations Equity and Annualized ROE US$ million Reconciliation - ROE Holdings - Consolidated Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Total equity at the end of the period 4,790.6 4,738.2 4,752.7 4,890.8 5,208.5 5,644.6 Net Income (Loss) for the period (45.1) (29.9)
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 financial performance despite variations in foreign currency e
Slide 49: 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 50: www.investors.nu investors@nubank.com.br
www.investors.nu investors@nubank.com.br Second Quarter 2023 Results 50