Nu Holdings Ltd. · NYSE:NU
Nu — Q1 2024 Earnings Presentation
44 slides from Nu's earnings presentation, May 14, 2024
Slide 1: Q1 2024 Earnings Presentation
Q1 2024 Earnings Presentation May 14, 2024 First Quarter 2024 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 Q1’24 Main Highlights Customers (MM) 100MM 99.3MM US$ 1.2BN May’24 Customers +20.2M YoY Gross Profit +76% FXN YoY 99.3 93.9 54% of Adult Population of Brazil Gross Profit Margin 43% 89.1 83.7 83% Monthly Activity Rate US$ 378.8
Slide 4: Compounding Growth, with Meaningful Shift to Profitability
Compounding Growth, with Meaningful Shift to Profitability Customers (MM) Revenues (US$ MM) Gross Profit (US$ MM) Net Income (Loss) (US$ MM) CAGR: 29% CAGR: 75% CAGR: 99% 6% QoQ FXN FXN FXN 2,735.9 378.8 ~1.7x ~3.1x ~3.9x 1,181.6 360.9 99.3 2,404.9 1,143.2 93.9 303.0 89.1 83.7 2,136.8 79.1 914.8 74.
Slide 5: Nu Holdings' Profitability Momentum Continues
Nu Holdings’ Profitability Momentum Continues Despite its Significant Excess Capital, Nu Holdings' ROE is at 23%. Financial Performance (US$MM) Metrics Q1’23 Q2'23 Q3'23 Q4’23 Q1’24 Revenues 1,619 1,869 2,137 2,405 2,736 YoY FXN 87% 60% 53% 57% 64% Gross Profit 651 782 915 1,143 1,182 Margin 40% 42%
Slide 6: Major Milestones in Mexico Materializing Faster than in Brazil
Major BR Milestones V MX in Mexico Materializing Faster Execution than in Brazil Comparison of Brazil and Mexico 19 quarters after launch Mexico Q1’24 Brazil Q4’18 Customers 6.6 MM 6.0 MM Market Share % 5.1% 3.0% Active Credit Card Customers 3.2 MM 4.5 MM Market Share % 2.5% 2.3% Active NuAccounts 3
Slide 7: Q1'24 Results
Q1'24 Results First Quarter 2024 Results 7
Slide 8: Our Model Powers Our Earnings Generating Formula
Our Model Powers Our Earnings Generating Formula Rapidly Growing Increasing Revenue Low Cost Substantial Customer Base Per Customer Operating Platform Earnings Power ACTIVE CUSTOMERS ARPAC COST TO SERVE First Quarter 2024 Results 8
Slide 9: Strong Customer Acquisition and Sustained Growth in Activity Rate
Strong Customer Acquisition and Sustained Growth in Activity Rate Customers YoY: +26% Customers (MM) Active Customers YoY: +27% Active Customers 64.9 68.8 73.8 78.0 82.6 (MM) 99.3 93.9 89.1 79.1 83.7 Activity Rate 83.2% (%) 83.1% 82.8% 82.2% 82.1% Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 First Quarter 2024 Res
Slide 10: Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion
Compounding Effect of More Engagement and More Cross-sell Driving ARPAC Expansion Active Customers Using NuAccount Number of Products Per Monthly ARPAC by Quarterly Cohort as their Primary Banking Account (%) Active Customer (US$ | FX Neutral) US$ month/ Avg. monthly ARPAC of US$11.4/month while mor
Slide 11: Sustained Revenue Growth Fueled by Customer Acquisition and ARPAC Expansion
Sustained Revenue Growth Fueled by Customer Acquisition and ARPAC Expansion ARPAC (US$) Revenues (US$MM) YoY: 30% YoY: 64% FXN FXN 11.4 2,736 10.6 10.0 2,405 9.3 2,137 8.6 1,869 1,619 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Note 1: Amounts are presented in US dollars and growth r
Slide 12: Purchase Volume Growth Remains Strong YoY, Despite Q1 Seasonality
Purchase Volume Growth Remains Strong YoY, Despite Q1 Seasonality Purchase Volume (US$BN) Historical Q1 Purchase Volume per Customer (US$) Seasonality $400 FXN US$ -6.9% Prepaid Cards Credit Cards YoY: 30% month/ customer For constant risk mix analysis, please refer to the Appendix. FXN $350 Credit
Slide 13: Strong Performance for Both Credit Card and Personal Loan Portfolios
Strong Performance for Both Credit Card and Personal Loan Portfolios Total Portfolio (US$BN) Total Portfolio (%) Personal Loans YoY: 52% Personal Loans Credit Cards Credit Cards FXN Credit Card: 42% FXN Personal Loans: 88% FXN 18% 19% 20% 20% 23% 19.6 18.2 15.4 4.5 14.8 3.7 12.8 3.1 2.8 2.3 82% 81%
Slide 14: Interest Earning Portfolio over Total Portfolio Surpasses Market
Interest Earning Portfolio over Total Portfolio Surpasses 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 Earning Instal
Slide 15: Sequential Acceleration of Secured and Unsecured Loan Origination
Sequential Acceleration of Secured and Unsecured Loan Origination Originations (R$BN) YoY: 95% Brazil Only BRL Unsecured Personal Loans Secured Personal Loans 12.3 1.7 10.0 8.9 1.0 10.6 Credit Yield 0.3 7.3 8.6 9.0 (%) 6.3 0.1 7.2 6.3 6.8% 6.4% 6.1% 6.2% 5.7% Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 First Quar
Slide 16: Robust Deposit Franchise Driven By Sustainable Volume Growth
Robust Deposit Franchise Driven By Sustainable Volume Growth and Stable Cost of Deposits Deposits (US$BN) Historical Q1 YoY: 53% Seasonality Brazil -4.6% FXN Mexico 23.7 24.3 1.0 2.3 Cost of 18.0 19.1 22.7 22.0 Deposits as a % of Interbank 0.2 15.8 18.9 Rate 17.9 15.8 81% 80% 80% 80% 84% Q1'23 Q2'23
Slide 17: Net Interest Income Expansion Driven by Growth of Interest Earning Portfolio
Net Interest Income Expansion Driven by Growth of Interest Earning Portfolio NII (US$MM) & NIM (%) YoY: 93% FXN 1,619.5 1,345.7 1,195.0 1,046.8 NIM (%) 815.3 19.5% 18.3% 18.8% 18.3% 15.0% Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Note 1: ‘NII’ (Net Interest Income) is calculated as Interest income and gains (lo
Slide 18: Stable Cost to Serve Underscores Operating Leverage Potential
Stable Cost to Serve Underscores Operating Leverage Potential Cost to Serve per Active Customer (US$) YoY: 0% FXN 0.9 0.9 0.9 0.8 0.8 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Note 1: Amounts are presented in US dollars and growth rates on an FX Neutral basis. For additional detail on calculations please refer
Slide 19: Sustained Gross Profit Growth and Margin Expansion
Sustained Gross Profit Growth and Margin Expansion Gross Profit (US$MM) YoY: 76% FXN 1,143.2 1,181.6 914.8 782.0 Gross Profit Margin (%) 650.9 47.5% 42.8% 43.2% 41.8% 40.2% Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 First Quarter 2024 Results 19 Note 1: Amounts are presented in US dollars and growth rates on an
Slide 20: Strong Track Record of Driving Operating Leverage as Business Scales
Strong Track Record of Driving Operating Leverage as Business Scales Efficiency 91.6% NII + F&C (US$MM) Costs (US$MM) Efficiency Ratio 75.8% 72.7% 2,075.2 72.3% 1,799.3 65.6% 1,599.1 1,415.2 58.2% 55.1% 1,178.5 1,043.0 750.0 47.4% 847.0 604.2 459.0 39.0% 379.5 36.0% 278.9 35.4% 35.0% 213.3 32.1% (19
Slide 21: 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 6.3% $24.3Bn Per Customer Monthly Avg. per Active Consumer Finance Deposits Customer Delinquenc
Slide 22: Driving Sustained Growth in Both Net Income and Adjusted Net Income
Driving Sustained Growth in Both Net Income and Adjusted Net Income Adjusted Net Income YoY: Net Income (US$MM) +136% Adj. Net Income (MM) 182.4 262.7 355.6 395.8 442.7 Adj. Net Income Margin (%) 11% 14% 17% 17% 16% YoY: 160% FXN 360.9 378.8 Net Income Margin 303.0 (%) 224.9 141.8 14% 15% 14% 12% 9%
Slide 23: Q1'24 Credit Underwriting
Q1'24 Credit Underwriting First Quarter 2024 Results 23
Slide 24: Delinquency Ratios Tracking Expectations
Delinquency Ratios Tracking Expectations 15-90 NPLs 90+ NPLs Brazil Consumer Credit Portfolio Historical Q1 15-90 Brazil Consumer Credit Portfolio Historical Q1 90+ NPL NPL Seasonality Seasonality +80 bps 0 bps 6.2% 6.1% 6.1%6.3% 5.9% 5.6% 5.5% 5.0% 5.1% 5.1% 5.1% 5.0% 5.2% 5.2% 5.0% 4.4% 4.7% 4.5%
Slide 25: Declining 90+ NPL Ratios Over IEP Balance Imply Improving Risk-Return
Declining 90+ NPL Ratios Over IEP Balance Imply Improving Risk- Return 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% 13.0% 13.6% 14.1% 12.8% 12.1% 15.6% 12.1% 10.7% 10.4% 10.2% 14.1% 10.0% 8.4% 9.7% 13.6% 13.9%
Slide 26: Risk-Adjusted NIM Contraction Mainly Driven by Rising Deposits in Mexico
Risk-Adjusted NIM Contraction Mainly Driven by Rising Deposits in Mexico at Higher Funding Cost Credit Loss Allowance & Risk Adj. NIM 830.7 Recoveries 627.5 592.5 CLA 590.4 474.8 Risk Adj. 10.2% NIM 9.0% (%) 8.0% 9.5% 6.3% -17 -24 -51 -53 -110 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Note 1: ‘CLA’ stands for C
Slide 27: Q&A
Q&A First Quarter 2024 Results 27
Slide 28: Appendix
appendix 28 First Quarter 2024 Results
Slide 29: A Business Model That Drives Multi-Product Growth
A Business Model That Drives Multi- Product Growth Active Active Credit Active Investments Pix and Boleto Financing Customers Card Customers Customers Active Customers 82.6MM 41.2MM 17.0MM 15.3MM + 27% YoY + 19% YoY + 85% YoY + 94% YoY Active Active Unsecured Active SME Active Insurance NuAccounts P
Slide 30: Comfortable Capital and Liquidity Positions
Comfortable Capital and Liquidity Positions Capital Position (US$Bn) Liquidity Position (US$Bn) Nu Holdings Cash & 5.6 Equivalents 24.3 Capital Excess LDR 1.7x 40% Capital Requireme nt 2.4 3.2 1.2 1.2 9.7 2.1 2.1 Capital in our Geos Nu Holdings Interest Earning Portfolio Total Deposits Note 1: Brazi
Slide 31: Formation Ratios Remain Stable
Formation Ratios Remain Stable NPL Formation Stage 3 Formation Brazil Consumer Credit Portfolio Brazil Consumer Credit Portfolio 3.2% 3.3% 3.0% 3.2% 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% 2.9% 2.7% 2.6% 1.9% 2.0% 1.9% 2.1% 2.5% 1.8% 1.7% 2.3% 1.6% 1.6% 1.6% 1
Slide 32: Rising Coverage Ratios Reflect NPL Dynamics
Rising Coverage Ratios Reflect NPL Dynamics Coverage Ratio Over Total Balance Coverage Ratio Over NPL 90+ Brazil Consumer Credit Portfolio Brazil Consumer Credit Portfolio 14.4% 13.5% 13.7% 12.6% 262.6% 257.5%263.9% 11.6% 242.5% 10.9% 235.2% 229.1% 10.6% 223.0% 222.2% 213.3% 9.7% 238.0% 199.0% 9.0%
Slide 33: 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$MM, FXN) (16) 293400% 411 253900% 2,934 2,539 0% 0% Q4'23 ECL Growth Other Q1'24 ECL Note 1: The information presented is for Nu Holdings and includes both credit card and personal loans provision ba
Slide 34: Consistent Growth and ARPAC Acceleration Across All Cohorts Adjusted By Constant Risk Mix
Consistent Growth and ARPAC Acceleration Across All Cohorts Adjusted By Constant Risk Mix Adj. Purchase Volume (US$) 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 $150
Slide 35: Loan Portfolio (FX Neutral) (1/2) Steady Credit Book Expansion
Loan Portfolio (FX Neutral) (1/2) Steady Credit Book Expansion Total Portfolio (FXN US$BN) YoY: 52% Personal Loans FXN Credit Card IEP Personal Loans: 88% FXN Credit Card IEP: 86% FXN Credit Card non-IEP Credit Card non-IEP: 27% FXN 11% 14% FXN 19.6 9% FXN 17.6 25% 10% FXN 15.5 16% FXN 4.5 FXN 14.2
Slide 36: Loan Portfolio (FX Neutral) (2/2) Steady Credit Book Expansion
Loan Portfolio (FX Neutral) (2/2) Steady Credit Book Expansion Total Portfolio (FXN US$BN) YoY: 52% Personal Loans FXN Credit Card IEP Personal Loans: 88% FXN Credit Card IEP: 86% FXN Credit Card non-IEP Credit Card non-IEP: 29% FXN 11% 14% FXN 19.6 9% FXN 17.6 25% 10% FXN 15.5 16% FXN 4.5 FXN 14.2
Slide 37: Deposits (FX Neutral) Steady Growth Over The Past Year
Deposits (FX Neutral) Steady Growth Over The Past Year Deposits (US$BN) Historical Q1 YoY: 53% Seasonality Brazil -4.6% FXN Mexico 6% 24.3 19% 23.0 FXN FXN 1.0 2.3 Cost of 8% 12% FXN 19.2 22.0 22.0 Deposits as a % FXN 17.2 0.2 of Interbank 15.9 19.0 Rate 17.1 15.9 81% 80% 80% 80% 84% Q1'23 Q2'23 Q3'
Slide 38: 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 39: 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 March 31, Adjusted Net Income (US$ million) 2024 2023 Profit attributable to shareholders of the parent company 378.8 141.8 Share-based compensation 127.8 65.2 Alloca
Slide 40: 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 41: 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 Q1'23 Q2'23 Q3'23 Q4’23 Q1’24 Total equity at the end of the period 5,208.5 5,644.6 5,889.3 6,406.4 6,802.7 Net Income for the period 141.8 224.9 303.0 3
Slide 42: 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 43: 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 44: www.investors.nu investors@nubank.com.br
www.investors.nu investors@nubank.com.br First Quarter 2024 Results 44