Nu Holdings Ltd. (NYSE: NU), one of the largest digital financial services platforms, released its Fourth Quarter and Full Year 2023 financial results.
Financial results are expressed “in U.S. dollars and are presented in accordance with International Financial Reporting Standards (IFRS).”
David Vélez, founder and CEO of Nubank, said:
“We are building the largest consumer platform in Latin America, with strong earnings-generating capabilities, having delivered over $8 billion in revenues and $1 billion in net profit in 2023. As we work towards surpassing the 100 million customers milestone in 2024, we are investing heavily in new growth avenues to keep transforming potential into profit. We are unlocking the untapped opportunity of our secured and unsecured lending portfolio, gaining share in the upmarket segment in Brazil, and strengthening our presence in Mexico and Colombia with new products and features. This proves our ability to accelerate our company-wide flywheel beyond our core market and keep pursuing further opportunities.”
Operating Highlights:
- Customer growth: Nu added 4.8 million customers in Q4’23 and 19.3 million year-over-year (YoY), reaching a total of 93.9 million customers globally by December 31, 2023, compared to 54 million only two years ago. This underpins Nu’s position as one of the largest and fastest-growing digital financial services platforms worldwide and the fifth-largest financial institution in Latin America by number of customers. In Brazil, the customer base reached 87.8 million by December 31, 2023, representing 53% of the country’s adult population. Nu is the fourth-largest financial institution by number of customers in the country, according to Brazilian Central Bank data.
- Engagement and activity rates: Monthly Average Revenue per Active Customer (ARPAC) grew to $10.6 in Q4’23, a 23% expansion YoY on FX neutral basis (FXN)1, with more mature cohorts already at $27. Nu continues to win principality among its customer base, driving engagement and revenues up. Nu became the primary banking relationship for over 61% of the monthly active customers, and activity rate2 grew to a new all-time high of 83.1%.
- Low-cost operating platform: Monthly Average Cost to Serve Per Active Customer remained virtually unchanged and below the dollar level at $0.9 which, combined with the sustained expansion of ARPAC quarter over quarter, demonstrates the strong operating leverage of Nu’s business model. The company’s efficiency ratio reached 36.0% in Q4’23 and Full Year 2023, improving 19 percentage points compared to the Full Year 2022 and strengthening Nu’s position as one of the most efficient companies in Latin America.
- Asset Quality: in Brazil, Nu’s 15-90 NPL ratio decreased slightly to 4.1%, in line with expectations. The 90+ NPL ratio remained stable at 6.1% in line with the expected stacking behavior of the early delinquency buckets from previous periods.
Financial Highlights: - Net & Adjusted Income: At a Holding level, Nu continued to drive increased profitability and posted a Net Income for Q4’23 of $360.9 million for an annualized ROE of 23%, compared to a $58 million profit in Q4’22. For FY’23, the Net Income was $1.0 billion, compared to a $9.1 million Net Loss in FY’223. Adjusted Net Income4 for Q4’23 reached $395.8 million with an annualized adjusted ROE of 26%, compared to an Adjusted Net Income of $113.8 million in Q4’22. For FY’23, Adjusted Net Income reached $1.2 billion, compared to an Adjusted Net Income of $204.1 million in FY’22. Nu is achieving these strong levels of profitability while continuing to make substantial investments in future products and geographic expansion, as the company sees tremendous potential to continue building the largest consumer platform in Latin America.
- Revenue: Nu’s revenues in the quarter surged to $2.4 billion, another new record high, which represents a 57% increase FXN from Q4’22. This showcases the company’s unique ability to consistently expand its customer base while accelerating revenue growth and profitability.
- Gross Profit: Nu’s gross profit reached another quarterly record high of $1.1 billion, an 87% increase YoY FXN. Gross profit margin expanded once again to 48%.