Nu Holdings outlines $3.7B quarterly revenue and major leadership hires as growth accelerates across Latin America

Earnings Call Insights: Nu Holdings Ltd. (NU) Q2 2025

MANAGEMENT VIEW

* CEO David Velez-Osomo highlighted strong growth, stating the customer base expanded to nearly 123 million with over 4.1 million net additions, maintaining an activity rate above 83%. He emphasized, "In Mexico, we surpassed 12 million customers now serving approximately 13% of the adult population. And in Colombia, nearly 10% of the population is already choosing Nu as their financial partner." Velez-Osomo reported revenues of $3.7 billion for Q2 and a gross profit of $1.5 billion, noting, "Quarterly net income has almost tripled in the past 2 years to $637 million." He added that management changes included the addition of Roberto Campos Neto (Vice Chairman and Head of Public Policy), Eric Young (Chief Technology Officer), and Ethan Eismann (Chief Design Officer).
* Velez-Osomo stated, "This spread is no accident. It is the result of a deliberate cross-sell strategy that expands a single product relationship into a broad ecosystem."
* CFO Guilherme Marques do Lago said, "In the second quarter of 2025, our monthly ARPAC crossed the $12 mark for the first time, reaching $12.2, up 18% year-over-year." He continued, "Total balances reached $27.3 billion in the second quarter, up 40% year-over-year on an FX neutral basis."

OUTLOOK

* Management expects the full impact of lower deposit yields in Mexico and Colombia to materialize gradually over the coming quarters. Lago explained, "We expect the full impact to materialize only gradually and over the coming quarters."
* Lago stated, "We see further room for margin expansions as we optimize the balance sheet, gradually reallocating liquidity from cash into credit and lower our cost of funding in Mexico and Colombia."
* The company plans continued investment in Mexico, focusing on growing an engaged customer base, building a local currency liability franchise, and improving credit underwriting models.

FINANCIAL RESULTS

* Revenues reached $3.7 billion in Q2 2025, with a gross profit of $1.5 billion. Lago reported monthly ARPAC at $12.2, and cost to serve per active customer stable at $0.80.
* Net income for the quarter was $637 million, and the return on equity reached 28%.
* Loan originations totaled $3.6 billion, marking a 43% year-over-year increase on an FX neutral basis. Total deposits were $36.6 billion, up 41% year-over-year.
* Net interest income was $2.1 billion for the quarter, with a risk-adjusted NIM of 9.2%.
* Gross profit margin improved to 42.2%, up from 40.6% in the past quarter. The efficiency ratio rose to 28.3%, attributed to RSU expenses and increased marketing investments.

Q&A

* Eduardo Rosman, BTG: Asked about management changes and international expansion. Velez-Osomo responded, "We are preparing to play in the world -- in the top leagues, in the world class... This likely is going to mean adding talent sometimes that come from Latin America globally but also some talent that comes from some of the top world-class technology companies."
* Jorge Kuri, Morgan Stanley: Questioned loan origination growth and credit expansion. Lago explained that robust Q1 growth was due to new models and seasonality, and expects strong unsecured lending originations to continue. He noted, "We now account for over 20% of the origination market share of new unsecured loans in Brazil."
* Yuri Fernandes, JPMorgan: Asked about higher Stage 3 formation and asset quality. Lago clarified, "The increase in NPL formation as well as in Stage 3 formation... is almost entirely explained by the seasonality of basically the spike in seasonal delinquency in the first quarter flowing through the second quarter."
* Geoffrey Elliott, Autonomous: Queried the mix of credit card balances. Lago replied, "I wouldn't suggest that there is a lot of room for us to go materially beyond the 29% that you alluded."
* Neha Agarwala, HSBC: Asked about deposit trends in Brazil and Mexico. Lago stated, "I wouldn't justify the increase in deposits based on increase in cost of funding but largely on increasing customer engagement and sequential gains in shares of wallet."
* Pedro Leduc, Itau: Sought clarification on Pix financing and active credit card trends. Lago explained, "The performance of the portfolio continues to be fairly robust, and it has been widely adopted by our customer base."
* Mario Pierry, Bank of America: Inquired about the private payroll product. Lago responded, "We are very excited about private payroll loan product. We think that has been a fairly important and thoughtful product innovation that has been added to Brazil."
* Daer Labarta, Goldman Sachs: Asked about balancing loan and deposit growth. Lago stated, "We are very comfortable with the loan-to-deposit ratio that we see in Brazil, Mexico and Colombia."

SENTIMENT ANALYSIS

* Analysts were generally positive, frequently congratulating management on results but probing into asset quality, product rollout timing, and strategy for new segments. Some skepticism appeared around seasonality and new product adoption, but overall tone remained optimistic.
* Management maintained a confident and forward-looking tone in both prepared remarks and responses, highlighting operational strength and deliberate investments. Lago stated, "We are very confident in our opportunity to win in Mexico, and our focus remains on disciplined execution and long-term value creation."
* Compared to the previous quarter, management's tone remained consistently confident, with both analysts and management showing continued optimism but also increased focus on execution details as new products and segments scale.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language shifted to emphasize the gradual materialization of lower funding costs in Mexico and Colombia.
* Strategic focus increased on cross-sell strategies, scaling in new markets, and adding high-profile management talent.
* Key metrics such as revenue, net income, and customer base all showed marked increases compared to Q1.
* Analysts in both quarters focused on credit quality, loan growth, and efficiency, but Q2 included more questions on the impact of new hires and internationalization.
* Management's confidence in the business model and growth trajectory remained strong; analysts' tone was slightly more constructive, with deeper inquiries into operational execution.

RISKS AND CONCERNS

* Management noted seasonality and early-stage delinquency as drivers for credit loss allowances and NPL formation.
* Lago highlighted, "We always assume that the future will be worse than the past...every cohort of unsecured credit that we underwrite has to abide by...losses have to go up -- can go up by up to 2x, and that cohort still has to be NPV positive."
* Analysts raised concerns about asset quality, the impact of deposit repricing, and the timing of product rollouts, particularly in new markets and product segments.

FINAL TAKEAWAY

Nu Holdings reported another quarter of strong expansion, crossing 123 million customers and achieving record revenues and net income, while strengthening its management team for the next phase of growth. The company continues to invest in new markets and products, with a disciplined approach to credit and cost management, and expects further margin improvement as funding costs decrease in Mexico and Colombia. Management remains confident in its multi-geo, multi-product strategy and its ability to drive sustainable, long-term value creation for shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/nu/earnings/transcripts]

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