NU HOLDINGS LTD. 
Nu Holdings, listed on the NYSE in New York under the symbol NU, is a Brazilian company specializing in digital financial services. Founded in 2013, the company's mission is to revolutionize banking in Latin America by offering accessible, affordable and customer-centric financial solutions.
Nubank offers a comprehensive range of financial products covering spending, saving, investing, borrowing and protection. The company operates mainly in Brazil, Mexico and Colombia, with a customer base of over 100 million people. In Brazil, it covers 55% of the adult population. Nubank operates as a neobank without physical branches, using a cloud-based, mobile-focused platform.
Key services include credit and debit cards offering instant payment solutions and customized credit lines, interest-bearing savings accounts with complementary debit cards; investment products and services via the NuInvest platform; unsecured and secured loans, including personal and payday loans; and insurance, life insurance and funeral services via NuInsurance.
The company stands out for its customer-centric approach, advanced use of data science and fully digital model, enabling it to maintain low operating costs and high customer acquisition efficiency.
Steady growth
Since its launch, Nubank has seen exponential growth in the number of users, and the latest quarter continues this trend, with a new record of 105 million users (almost 6 million more than in Q1 2024).
For the second quarter of 2024, Nu Holdings recorded sales of USD 2.85 billion, up 52% on the previous year's USD 1.87 billion. Net income reached USD 487.27 million, compared with USD 224.87 million a year earlier, an increase of 117%. Basic earnings per share from continuing operations amounted to USD 0.1018, compared with USD 0.0475 the previous year. Diluted earnings per share from continuing operations came to USD 0.0998, compared with USD 0.0464 a year earlier.
Gross margin improved further, rising to 48% from 43% in the first quarter of 2024. Return on equity stood at 28% versus 23% for the first quarter 2024.
For the half-year, revenues amounted to USD 5.58 billion, compared with USD 3.49 billion the previous year. Net income for the period was USD 866.09 million, compared with USD 366.62 million a year earlier. Basic earnings per share from continuing operations amounted to USD 0.1812, compared with USD 0.0777 the previous year. Diluted earnings per share from continuing operations were USD 0.1776, compared with USD 0.0758 a year earlier.
Performance in all segments
The consumer credit portfolio, including credit cards and loans, enjoyed strong growth. The total portfolio reached USD 18.9 billion, up 49% year-on-year and 8% on the previous quarter on a currency-neutral basis. Credit cards increased by 39% year-on-year and 6% quarter-on-quarter, reaching USD 14.3 billion. Loans also posted impressive growth of 92% year-on-year and 15% quarter-on-quarter, reaching USD 4.6 billion.
Total deposits rose by 64% year-on-year to USD 25.2 billion, mainly thanks to significant expansion in Mexico via Cuenta Nu. In Brazil, deposits reached USD 21.7 billion, up 10% quarter-on-quarter on a currency-neutral basis.
More customers, and an acquisition
Nu added 5.2 million new customers during the quarter, bringing the total to 104.5 million to be exact, an increase of 25% year-on-year. Customer growth in Brazil remains exceptional, with an average of 1.2 million new customers per month, reaching 95.5 million at the end of the quarter. In Mexico, the company also enjoyed strong growth, with 1.2 million new customers, bringing the total to 7.8 million. In Colombia, the number of customers surpassed the million mark, reaching 1.3 million following the successful launch of the Cuenta product.
Nu Holdings announced the acquisition of Hyperplane, a Silicon Valley-based company specializing in artificial intelligence solutions for financial services. The acquisition is aimed at strengthening Nu's AI capabilities and enhancing the performance of its machine learning models.
A strong balance sheet and appropriate allocation
Nu maintains a strong cash position with USD 6 billion in cash and cash equivalents. The company's loan-to-deposit ratio is 40%, well below that of its peers, and the assets-to-equity ratio is 6, favorable compared with the industry norm of 12 or more. These indicators show that Nu is well positioned to repay its debts and finance future growth.
Although the Brazilian company does not report free cash flow (FCF) due to the nature of its banking operations, the company generates substantial interest income. No specific announcements concerning dividend payments or share buybacks have been made for this quarter. However, the company continues to reinvest its profits in the growth and expansion of its activities. This is surely the best thing it can do at this stage of growth.
Outlook for the future
Nubank plans to continue expanding in Mexico and Colombia, while increasing its market share in Brazil. The company also aims to launch new products and services based on technologies such as real-time payments, open banking and AI. Analysts forecast continued growth, with estimated sales of between $10.6 and $11.2 billion in 2024. For 2025 and 2026, analysts expect estimated sales of $14.4 and $17.7 billion respectively.
Results for the second quarter of 2024 show a solid performance and continued growth in all business segments. The company is well positioned to pursue its expansion in Latin America and continue to offer innovative and accessible financial solutions to its customers. There are no dark clouds on the horizon as long as the growth pipeline is abundant. This stock is part of the Momentum Picks Q3 2024 selection .
