SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 6-K
Report
of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the month of August,
2022
Commission File Number 001-41129
Nu Holdings Ltd.
(Exact name of registrant as specified
in its charter)
Nu Holdings Ltd.
(Translation of Registrant's
name into English)
Campbells Corporate Services
Limited, Floor 4, Willow House, Cricket Square, KY1-9010 Grand Cayman, Cayman Islands
+1 345 949 2648
(Address of principal executive
office)
Indicate by check mark whether
the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F (X) Form 40-F
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes No (X)
São Paulo – August 15, 2022 – Nu Holdings Ltd. (“Nu”,
“Nu Holdings” or “the Company”) (NYSE: NU | B3: NUBR33), Nu, one of the world’s largest digital banking
platforms, today reported its unaudited results for the quarter ended on June 30, 2022 (Q2'22). Financial results are expressed in U.S.
dollars and are presented in accordance with International Financial Reporting Standards (IFRS), unless otherwise noted.
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Nu Holdings Reports Q2’22 Financial
and Operating Results
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Added 5.7 million customers in the quarter
and 23.6 million year-on-year (YoY), reaching a total of 65.3 million customers, a 57% YoY increase, reinforcing
Nu’s position as one of the largest digital banking platforms in the world.
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Revenues of $1.2 billion, +230% YoY
on FX neutral basis (FXN), and Monthly Average Revenue per Active Customer (ARPAC) of $7.8, +105% YoY FXN.
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Deposits of $13.3 billion, +87% YoY
FXN, and Interest-Earning Portfolio of $3.2 billion, +220% YoY FXN. Loan-to -deposit ratio remained at 24%.
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Leading indicators have remained stable and asset quality continued normalizing post pandemic: Nu's NPL 15-90 remained at 3.7%1 while 90+ reached 4.1%1.
1: Data for Brazil only. |
Strategic Initiatives
and Business Update
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Growing and More Engaged
Customer Base. Nu ended Q2'22 with a record 65.3 million customers, reaching historical highs for both retail customers
and SMEs. Brazilian customers increased 51% YoY to 62.3 million, with an activity rate setting a record high of 80%. Nu
customers now represent 36% of the country’s adult population. Moreover, Nu has become the primary bank for over 55%
of the monthly active customers who have been with the Company for over a year. In Mexico, Nu´s customer base increased over 6x
YoY to 2.7 million, consolidating the Company’s position as the largest issuer of new credit cards in the country since
H2’212. In Colombia, the Company believes that it has become the largest issuer of new credit cards in H1’222,
having reached around 314,000 customers in the quarter. Together these two countries added nearly 700,000 unique customers
in the second quarter.
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Increasing Client
Engagement by Building a Multi-Product Platform. During the quarter, the core products, which include credit cards, Nu Account,
and personal loans reached 29 million, 45 million, and 4 million active customers, respectively.
In addition to these three core products, insurance,
launched last year, reached over 700,000 active policies, the direct-to-consumer investment platform, NuInvest, reached over 5
million active customers and, the Nucripto product reached 1 million customers in July 2022, only 3 weeks after its
launch.
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Sustaining Growth
of Deposit Franchise. Deposits increased 87% YoY FXN, reaching $13.3 billion in Q2'22, with an average
funding cost below the CDI rate, Brazil’s risk-free rate. This implied significant excess liquidity, as reflected in Nu’s
24% loan-to-deposit ratio.
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Expanding Interest-Earning
Portfolio. Portfolio increased 220% YoY FXN, reaching $3.2 billion in Q2'22. Growth was driven primarily by the
ramp up of personal loans, which increased 250% YoY FXN to $2.1 billion3 in Q2'22 and accounted for 23%
of the total portfolio, compared to 13% in Q2'21. Growth was also driven by new credit card consumer finance products launched
during the past 12 months, including purchase financing, bank slip (boleto) financing and bill refinancing.
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Increasing Nu's Share
of Customer's Financial Lives. ARPAC expanded 105% YoY FXN to $7.8 in Q2'22, mostly driven by the maturation
of the Company's customer cohorts, customers' activity rate and the rollout of new products.
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Sustaining Low Cost
to Serve. Monthly Average Cost to Serve Per Active Customer reached $0.8 in Q2'22 while remaining flat YoY FXN. In Q1'22,
Nu recognized a one-time effect in the average cost to serve and, in Q2'22, it was impacted by the USD to BRL average FX rate appreciation.
Excluding both effects, the average cost to serve would have remained stable compared to Q1’22 and demonstrates the Company’s
ability to scale the platform with sustainable cost advantages.
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2: Source - Banxico and SFC.
3: Figures do not consider the changes to the write-off estimates implemented in the second quarter of 2022 to ensure better comparability
across the applicable periods.
Summary of Consolidated Financial and Operating Metrics is presented
for the three-month periods ended June 30, 2022 and 2021 and March 31, 2022. See definitions on page 11.
Summary of Consolidated Operating Metrics |
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CUSTOMERS METRICS |
Q2'22 |
Q2'21 |
Q1'22 |
Number of Customers (in millions) |
65.3 |
41.7 |
59.6 |
Number of Customers growth (%) |
57% |
12% |
61% |
Monthly Active Customers (in millions) |
52.3 |
29.9 |
46.5 |
Activity Rate |
80% |
72% |
78% |
CUSTOMER ACTIVITY METRICS |
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Purchase Volume (in US$ billions) |
20.0 |
9.9 |
15.9 |
Purchase Volume growth (%) |
102% |
32% |
112% |
Monthly Average Revenue per Active Customer (in $) |
7.8 |
4.0 |
6.7 |
Monthly Average Cost to Serve per Active Customer (in $) |
0.8 |
0.8 |
0.7 |
FX NEUTRAL |
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Purchase Volume (FX Neutral) (in US$ billions) |
20.0 |
10.3 |
16.2 |
Purchase Volume growth (%) |
94% |
24% |
94% |
Monthly Average Revenue per Active Customer (in $) |
7.8 |
3.8 |
6.0 |
Monthly Average Cost to Serve per Active Customer (in $) |
0.8 |
0.8 |
0.6 |
CUSTOMER BALANCES |
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Deposits (in $ billions) |
13.3 |
7.5 |
12.6 |
Deposits growth (%) |
77% |
134% |
129% |
Interest-Earning Portfolio (in $ billions) |
3.2 |
1.0 |
3.1 |
Interest-Earning growth (%) |
220% |
67% |
417% |
FX NEUTRAL |
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Deposits (in $ billions) |
13.3 |
7.1 |
11.4 |
Deposits growth (%) |
87% |
115% |
93% |
Interest-Earning Portfolio (in $ billions) |
3.2 |
1.0 |
2.8 |
Interest-Earning growth (%) |
220% |
43% |
343% |
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Summary of Consolidated Financial Metrics |
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COMPANY FINANCIAL METRICS |
Q2'22 |
Q2'21 |
Q1'22 |
Revenue (in $ millions) |
1,157.5 |
336.1 |
877.2 |
Revenue growth (%) |
244% |
107% |
258% |
Gross Profit (in $ millions) |
363.5 |
166.4 |
294.1 |
Gross Profit Margin (%) |
31% |
50% |
34% |
Credit Loss Allowance Expenses / Credit Portfolio (%) |
3% |
3% |
3% |
Loss (in $ millions) |
(29.9) |
(15.2) |
(45.1) |
Adjusted Net Income (Loss) (in $ millions) |
17.0 |
16.5 |
10.1 |
FX NEUTRAL |
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Revenue (in $ millions) |
1,157.5 |
351.0 |
891.4 |
Revenue growth (%) |
230% |
99% |
226% |
Gross Profit (in $ millions) |
363.5 |
173.8 |
298.8 |
Gross Profit Margin (%) |
31% |
50% |
34% |
Loss (in $ million) |
(29.9) |
(15.8) |
(45.8) |
Adjusted Net Income (Loss) (in $ millions) |
17.0 |
17.2 |
10.3 |
Customers
increased 57% YoY to 65.3 million in Q2’22. In Brazil, customers totaled 62.3 million, with the SME customer
base increasing 150%, growing to 2.0 million customers as of June 30, 2022, from 0.8 million as of June 30, 2021.
In Mexico, Nu´s customer base increased over 6x and reached 2.7 million customers. In Colombia, the number of customers
grew to around 314,000.
Activity Rate
increased 8.5 pp to 80% as of June 30, 2022, from 72% at the close of Q2'21, reaching another historic
high, and reflecting increased engagement, along with product upsell and cross-sell to customers who continue migrating more of their
financial lives to Nu’s digital platform.
Purchase Volume
reached $20 billion in Q2'22, expanding 94% YoY FXN, ranking Nu as Brazil’s #4 cards player in Brazil this
quarter, in terms of purchase of volume. Volume expansion was driven by both growth in Nu’s customer base and by the maturation
of Nu’s existing customers cohorts as well as by higher usage across Nu’s product portfolio that comprises of credit, prepaid,
secured and Ultraviolet cards.
Deposits
increased 87% YoY
FXN to $13.3 billion on June 30, 2022, reflecting growth in Nu’s customer base
together with the ongoing execution of the Company's strategy to grow its deposit franchise, a key pillar of its funding strategy.
Note 1: All data presented is for Brazil only.
Note 2: Boleto payments: allows customers
to use their credit card for paying bills in installments Purchase financing: allows customers to transform existing CC purchases in installments,
directly in the app Refinancing: allows customer to renegotiate existing installment plans into a single plan
Note 3: Market balances excluding Nu.
Note 4: IEP account for all interest-bearing
balances including all late balances.
Source: Nu, BACEN.
Interest-Earning Portfolio
(IEP) reached $3.2 billion on June 30, 2022, increasing 220% YoY FXN, and consists of credit cards and personal
loans. During Q2’22, Nu repriced and moderated the relative growth of the personal loan portfolio, aiming at strengthening the Company’s
credit resilience, given a more uncertain short-term outlook for the Brazilian economy. At the same time, the evolution of the credit
card IEP has been consistently expanding as a result of the introduction of new products and features that allow Nu customers to use their
credit cards as a means of financing, with the non-late IEP primarily growing the most. These new features include the ability to finance
(i) bank slips; (ii) individual purchases into installments; and (iii) PIX transfers, in all cases using existing credit card limits.
Monthly Average
Revenue per Active Customer (ARPAC) increased 105% YoY FXN, to $7.8 in Q2'22. This increase largely reflects
the maturation of Nu’s customer cohorts, the rollout of new products and features, as well as a healthy increase in transaction
volumes, the robust expansion of Nu´s interest-earning portfolio, and growth in purchase volumes and related interchange fees.
Monthly Average Cost
to Serve Per Active Customer remained unchanged at $0.8 in Q2'22
compared to Q2'21, both on a remaining flat in YoY and YoY FXN basis, which reflects the low expenses per customer, a result of
Nu's focus on operating efficiency and the sustained expansion of the Company's ecosystem at scale.
As shown in the charts below, Nu’s customer
cohorts reflect a sustained expansion in the ratios and growth of primary banking accounts, number of products per monthly active customer,
and monthly ARPAC.
Compounding Effect of More Engagement
and More Cross-Sell Driving ARPAC Expansion
Note 1: Illustration assumptions i) Same amount
originated monthly ii) Constant amortization rate iii) Constant roll rates.
Note 2: Portfolio is equal to the sum of all
cohorts' overtime.
Note 3: The illustration assumes write-off
at month 12 of delinquency.
Source: Nu.
Write-off methodology
In Q2’22, Nu adopted a new write-off methodology for personal loans to better align write-offs with the recovery expectations, per
IFRS guidelines. The new methodology anticipates write-offs for non-performing personal loans at 120+ days instead of 360+ days, while
credit card write-off days remained at 360+ days. For both products, Nu applies a partial write-off methodology, which means that only
the "expected recovery" part of a loan that is written off is maintained on the balance sheet, under Stage 3. This change brings
two impacts to the NPL trends in two ways: (i) it reduces 90+ NPL ratios by virtue of eliminating 121-360 days delinquent loans from both
the numerator and the denominator of that calculation, and (ii) it increases the NPL 15-90 for personal loans, as it reduces the denominator
of the ratio. Such changes do not have any impact on Nu’s P&L as these write-offs had already been fully provisioned using the
ECL methodology under IFRS 9.
Early Delinquency Indicators Show Stability In
The Second Quarter
Note 1: Both graphs refer to Brazil's NPL only. In Q2’22, we
reviewed the methodology for recovering contracted cash flows from unsecured cash flow overdue low and 360 days +120 days. Our credit
card write-off methodology remains unchanged at 360+ days.
Note 2: Data for Brazil only.
Source: Nu
Non-Performing Loans
Delinquency Nu's NPL 15-90 as a leading indicator shows a stable picture of asset quality. Remaining at 3.7%, the ratio
suggests that the post-Covid normalization cycle may have run its course. 90+ delinquency measures increased from 3.5%4
to 4.1%4, in line with Nu’s expectations. The normalization cycle in credit cards is still working its way through
the 90+ measure as the delinquency inventories flow through the later-stage buckets.
Portfolio Growth Continues to be the Main Driver
of Provision Balance Increase
The provision balance grew by $129 million
on a FX neutral basis and following the aforementioned change in the write-off methodology. Additional provisions associated with the
growth in the credit portfolio accounted for approximately 85% of this increase. The residual amount of $39 million is related
to the effect of worsening risk. In the context of IFRS 9 and given the low duration of Nu’s portfolio, additional risk provisions
tend to be more sensitive to the variation in 15-90 delinquency as compared to the 90+ delinquency.
Note 1: The information presented is for Nu Holdings and includes
both credit card and personal loans provision balance.
Note 2: Amounts presented in FX neutral.
Note 3: In Q2 2022, we reviewed and changed our write-off methodology
for recovery of the contractual cash-flows of NPLs arising from unsecured personal loans from 360+ days to 120+ days. Our write-off methodology
for credit cards remained unchanged at 360+ days.
Source: Nu.
4: Data for Brazil only.
Strong Capital and Liquidity Position to
Navigate the Cycle
Note 1: It considers the capital
requirements for Nu Financeira S.A. (“NuFIN”), our main financial institution, as of June 30, 22, according to CMN Resolution
No. 4.955/21, as well as our commitment to maintain a 14% of minimum total capital ratio. For the purposes of this analysis, we did not
consider the Central Bank of Brazil Circular No. 3.681/13, in effect as of June 30, 2022, and applicable to Nu Pagamentos S.A. (“NuPAG”),
our main payment institution. The related capital requirements amounted to US$66M as of Q2 22. NuHoldings Cash considers an additional
USD 47M already remitted to the Participation Fund.
Source: Nu
Capital
As of June 30, 2022, Nu continued to
show a strong capital position with NuFin’s adjusted capital reaching $3.9 billion, of which 79% was cash and cash
equivalents.
Liquidity
At the end of Q2'22, Nu had an interest-earning
portfolio of $3.2 billion, while total deposits were more than four times this amount at with $13.3 billion.
REVENUE, FINANCIAL AND TRANSACTIONAL COSTS AND GROSS
PROFIT
Revenue increased 244%
YoY, or 230% YoY FXN,
to another record high of $1.2 billion in Q2’22.
Revenue ($ million) |
Q2'22 |
Q2'21 |
Interest Income and Gains (Losses) on Financial Instruments |
853.0 |
184.9 |
Fee and Commission Income |
304.5 |
151.2 |
Total |
1,157.5 |
336.1 |
FX Neutral |
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Interest Income and Gains (Losses) on Financial Instruments |
853.0 |
193.1 |
Fee and Commission Income |
304.5 |
157.9 |
Total |
1,157.5 |
351.0 |
Interest Income and Gains (Losses)
on Financial Instruments totaled $853.0 million in Q2’22, increasing 361% YoY, or 342% YoY FXN, resulting mainly
from higher net interest income in the consumer finance portfolio, that consists of personal loans and credit cards. The increase also
reflects the rise in Brazil’s interest rates during Q2'22 (the interbank deposit rate (CDI) averaged 12.4% p.a. in Q2'22
versus 3.2% p.a. in Q2’21) coupled with an increase in financial assets, related to the further expansion of Nu’s continued
to expand its retail credit services in Brazil. Fee and Commission Income in Q2´22 was $304.5 million, increasing 101%
YoY, or 93% YoY FXN. This was mainly due to higher interchange fees, driven by increased credit and debit card purchase
volumes as Nu continues to expand its customer base and their activity rates rise.
Cost of Financial and Transactional Services
Provided
Cost of Financial and Transactional Services
Provided increased 368% YoY, or 348% YoY FXN to $794 million in the Q2'22. This cost represented 69% of revenue
in Q2'22, compared to 50% in Q2'21, reflecting the following dynamics:
Cost of Financial and Transactional Services Provided ($ Million) |
Q2'22 |
Q2'21 |
Interest and Other Financial Expenses |
(407.5) |
(57.2) |
Transactional Expenses |
(48.0) |
(29.8) |
Credit Loss Allowance Expenses |
(338.5) |
(82.7) |
Total |
(794.0) |
(169.7) |
% of Revenue |
69% |
50% |
FX Neutral |
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Interest and Other Financial Expenses |
(407.5) |
(59.7) |
Transactional Expenses |
(48.0) |
(31.1) |
Credit Loss Allowance Expenses |
(338.5) |
(86.4) |
Total |
(794.0) |
(177.2) |
% Of Revenue |
69% |
50% |
The increase in Interest and Other
Financial Expenses was mainly due to higher interest expenses on retail deposits that resulted from the increase in Brazil’s interest
rates as well as the expansion of Nu’s retail deposits balance. The increase of Nu’s interest-earning portfolio directly
impacts the expansion of the Credit Loss Allowance Expenses as explained below.
Gross Profit
Gross Profit increased 118% YoY and 109%
YoY FXN to $363.5 million in Q2’22. The gross profit margin was 31% compared to 50% in Q2'21, reflecting the
impact of ECL credit provisioning under IFRS 9, as well as the impact of the higher interbank deposit rate, which had a positive effect
on revenues, while increasing interest expenses to a lesser extent, negatively impacting gross margins in the short-term. As the loan
portfolio matures and interest rates stabilize, Nu expects gross margins to converge to those observed for more mature cohorts in the
past.
OPERATING EXPENSES
Operating Expenses totaled $388.1 million
in Q2'22, up 124% YoY, or 115% YoY FXN, but declined to 34% of total revenues from 51% in Q2'21.
The main driver behind the absolute increase in operating expenses was the 90%, or 82% YoY FXN, growth in customer support
and operations expenses, reflecting the 57% increase in Nu’s customer base as well as investments to further enhance the
overall user experience. In addition, General and Administrative Expenses increased 88% YoY, or 80% YoY FXN,
principally due to higher share-based compensation related to the effect of associated payroll taxes expenses that arose from the YoY
change in Nu’s share price, and to an increase in headcount during the period.
Operating Expenses ($ million) |
Q2'22 |
Q2'21 |
Customer Support and Operations |
(77.7) |
(41.0) |
General and Administrative Expenses |
(229.5) |
(122.3) |
Marketing Expenses |
(36.2) |
(14.6) |
Other Income (expenses) |
(44.7) |
5.0 |
Total |
(388.1) |
(172.9) |
% of Revenue |
34% |
51% |
FX Neutral |
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Customer Support and Operations |
(77.7) |
(42.8) |
General and Administrative Expenses |
(229.5) |
(127.7) |
Marketing Expenses |
(36.2) |
(15.2) |
Other Income (expenses) |
(44.7) |
5.2 |
Total |
(388.1) |
(180.6) |
% of Revenue |
34% |
51% |
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Operating Leverage
Operating leverage is a key component of our
platform and can be observed in two fronts. First, as Nu expands its credit portfolio, the Company optimizes the use of the large and
low-cost deposit base and expands the net interest margin (NIM). Second, as the overall revenue level increases, there is further dilution
of the low-cost operating platform and improvement of the efficiency levels.
Note 1: NII (Net Interest Income) is calculated
as Interest income and gains (losses) on financial instruments minus Interest and other financial expenses.
Note 2: NIM stands for Net Interest Margin, is annualized, and is the ratio between NII in the numerator and the denominator is
defined as the following average balance sheet metrics: i) Cash and cash equivalents ii) Financial assets at fair value through profit
or loss iii) Financial assets at fair value through OCI iv) Compulsory deposits at central banks v) Credit Card Interest-earning portfolio
vi) Loans to customers (gross) vii) Interbank transactions viii) Other credit operations ix) Other financial assets at amortized cost.
Note 3: Efficiency Ratio is defined as Total Operating Expenses plus Transactional Expenses divided by NII and Fees & Commission
Income.
Note 4: SBC refers to Share Based compensation.
Source: Nu.
EARNINGS
Net Income (Loss)
Nu reported a Net Loss of $29.9 million
in Q2'22 compared to $15.2 million Net Loss in Q2'21, as a result of higher share-based compensation and related tax effects in
the quarter.
Adjusted Net Income (Loss)
In Q2'22, Nu reported an Adjusted Net
Income of $17.0 million compared to $16.5 million Adjusted Net Income in Q2'21, also as a result of higher share-based compensation
and related tax effects in the quarter.
Adjusted Net Income (Loss) is a non-IFRS
measure calculated using Net Income adjusted for expenses related to Nu’s share-based compensation as well as the tax effects related
to these items. For more information, please see “Non-IFRS Financial Measures and Reconciliations- Adjusted Net Income Reconciliation".
Activity rate
- is defined as monthly active customers divided by the total number of customers as of a specific date.
Bacen –
Central Bank of Brazil.
CAC
- means customer acquisition costs and consists of the following expenses: printing and shipping of a card, credit data costs (primarily
consisting of credit bureau costs) and paid marketing.
CDI (“Certificado
de Depósito Interbancário”) - Brazilian interbank deposit rate.
Credit Loss Allowance
Expenses/Credit Portfolio - is defined as credit loss allowance expenses, divided by the sum of receivables from credit
card operations (current, installments and revolving) and loans to customers, in each case gross of ECL allowance, as of the period end
date.
Customer
- is defined as an individual or SME that has opened an account with Nu and does not include any such individuals or SMEs that have
been charged-off or blocked or have voluntarily closed their account.
ECL or ECL Allowance
- means the expected credit losses in Nu´s credit operations, including loans and credit cards.
Efficiency ratio – refers to the ratio between total non-interest operating expenses
and transactional costs divided by net interest income plus fees and commissions income.
Foreign Exchange
("FX”) Neutral Measures - refer to certain measures prepared and presented in this earnings release to eliminate
the effect of FX volatility between the comparison periods, allowing management and investors to evaluate Nu´s financial performance
despite variations in foreign currency exchange rates, which may not be indicative of the Company's core operating results and business
outlook. For additional information, see “Non-IFRS Financial Measures and Reconciliations”.
Interest-Earning
Portfolio - consists of receivables from credit card operations on which Nu is accruing interest and loans to customers,
in each case prior to ECL allowance, as of the period end date.
IPO -
means Initial Public Offering.
Lagged –
15-90 NPL Lagged is calculated by dividing the current NPL balance by the total balance average between Montht-1 and Montht-3;
90 NPL Lagged is calculated by dividing the current NPL balance by the total balance average between Montht-4 and Montht-12.
Loan-Deposit-Ratio
(“LDR”) - is calculated as the total balance for Interest-Earning Portfolio divided by the total amount
of deposits at the end of the same period.
Money Boxes -
A new tool to save money in an organized and personalized way, according to each person's goals, directly in the Nu app.
Monthly Active
Customers - is defined as all customers that have generated revenue in the last 30 calendar days, for a given measurement period.
Monthly Average
Cost to Serve per Active Customer - is defined as the monthly average of the sum of transactional expenses and customer
support and operations expenses (sum of these expenses in the period divided by the number of months in the period) divided by the average
number of individual monthly active customers during the period (average number of individual monthly active customers is defined as the
average of the number of monthly active customers at the beginning of the period measured, and the number of monthly active customers
at the end of the period).
Monthly Average
Revenue per Active Customer or Monthly ARPAC - is defined as the average monthly revenue (total revenue divided by the
number of months in the period) divided by the average number of individual monthly active customers during the period (average number
of individual monthly active customers is defined as the average of the number of monthly active customers at the beginning of the period
measured, and the number of monthly active customers at the end of the period).
Net Interest
Income (NII) - is defined as interest income and gains (losses) on financial instruments minus interest and other financial
expenses.
Net Interest
Margin (NIM) - is defined as the annualized ratio between net interest income in the numerator and the average of cash
and cash equivalents and financial assets at fair value through profit or loss in the denominator.
Nu Financeira
and Nu Pagamentos - Nu Holdings’ subsidiaries in Brazil.
Number of Products
per Active Customers - refers to the number of active products an active customer has.
PFM -
Personal Finance Management.
Purchase Volume,
or PV - is defined as the total value of transactions that are authorized through Nu´s credit and debit cards
only; it does not include other payment methods that we offer such as PIX, WhatsApp payments or traditional wire transfers.
Recovery - is the
estimated amount of a defaulted contract with a customer that the company expects to receive.
SME -
means small and medium-sized enterprises.
Total Portfolio
- is the addition of credit card exposures and personal loans to customers.
Write-off - constitutes
a derecognition event when the institution has no reasonable expectations of recovering the contractual cash flows
This release speaks at the date hereof and the
Company is under no obligation to update or keep current the information contained in this release. Any information expressed herein is
subject to change without notice. Any market or other third-party data included in this release has been obtained by the Company from
third party sources. While the Company has compiled and extracted the market data, it can provide no assurances of the accuracy and completeness
of such information and takes no responsibility for such data.
This release contains forward-looking statements.
All statements other than statements of historical fact contained in this release may be forward-looking statements and include, but are
not limited to, statements regarding the Company’s intent, belief or current expectations. These forward-looking statements are
subject to risks and uncertainties, and may include, among others, financial forecasts and estimates based on assumptions or statements
regarding plans, objectives and expectations. Although the Company believes that these estimates and forward-looking statements are based
upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available,
and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including
those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our prospectus dated December 8, 2021 filed with the Securities and Exchange
Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended, and in our Annual Report on Form 20-F for the year ended
December 31, 2021, which was filed with the Securities and Exchange Commission on April 20, 2022. The Company, its advisers and each of
their respective directors, officers and employees disclaim any obligation to update the Company’s view of such risks and uncertainties
or to publicly announce the result of any revision to the forward-looking statements made herein, except where it would be required to
do so under applicable law. The forward-looking statements can be identified, in certain cases, through the use of words such as “believe,”
“may,” “might,” “can,” “could,” “is designed to,” “will,” “aim,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,” “forecast”,
“plan”, “predict”, “potential”, “aspiration,” “should,” “purpose,”
“belief,” and similar, or variations of, or the negative of such words and expressions.
The financial information in this document includes
forecasts, projections and other predictive statements that represent the Company’s assumptions and expectations in light of currently
available information. These forecasts, projections and other predictive statements are based on the Company’s expectations and
are subject to variables and uncertainties. The Company’s actual performance results may differ. Consequently, no guarantee is presented
or implied as to the accuracy of specific forecasts, projections or predictive statements contained herein, and undue reliance should
not be placed on the forward-looking statements in this press release, which are inherently uncertain.
In addition to IFRS financials, this presentation
includes certain summarized, non-audited or non-IFRS financial information. These summarized, non-audited or non-IFRS financial measures
are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. References
in this presentation to “R$” refer to the Brazilian real, the official currency of Brazil.
This release includes financial measures
defined as “non-IFRS financial measures” by the SEC, including: Adjusted Net Income (Loss) and certain FX Neutral measures
and provides reconciliations to the most directly comparable IFRS financial measure. A non-IFRS financial measure is generally defined
as a numerical measure of historical or future financial performance or financial position that purports to measure financial performance
but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. These non-IFRS financial measures
are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with IFRS.
Adjusted
Net Income (Loss) is defined as profit (loss) attributable to shareholders of the parent company for the period, adjusted for
expenses and allocated tax effects on share-based compensation in such period.
Adjusted Net Income (Loss) is presented
because our management believes that this non-IFRS financial measure can provide useful information to investors, securities analysts
and the public in their review of our operating and financial performance, although it is not calculated in accordance with IFRS or any
other generally accepted accounting principles and should not be considered as a measure of performance in isolation. We also use Adjusted
Net Income (Loss) as a key profitability measure to assess the performance of our business. We believe Adjusted Net Income (Loss) is useful
to evaluate our operating and financial performance for the following reasons:
- Adjusted Net Income (Loss) is widely
used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially
from company to company and from period to period, depending on their accounting and tax methods, the book value and the market value
of their assets and liabilities, and the method by which their assets were acquired.
- Non-cash equity grants made to executives,
employees or consultants at a certain price and point in time, and their hedge accounting effects for the corporate tax and social wages
and their income tax effects, do not necessarily reflect how our business is performing at any particular time and the related expenses
(and their subject impacts in the market value of our assets and liabilities) are not key measures of our core operating performance.
Adjusted Net Income (Loss) is not a
substitute for Net Income, which is the IFRS measure of earnings. Additionally, our calculation of Adjusted Net Income (Loss) may be different
from the calculation used by other companies, including our competitors in the technology and financial services industries, because other
companies may not calculate these measures in the same manner as we do, and therefore, our measure may not be comparable to those of other
companies.
Adjusted Net Income Reconciliation
For the three-month period ended June 30, 2022 and 2021
(In thousands of U.S. Dollars)
Adjusted Net Income (Loss) ($ million) |
Q2'22 |
Q2'21 |
Loss Attributable to Shareholders of the Parent Company |
(29.9) |
(15.2) |
Share-based Compensation |
59.8 |
42.5 |
Allocated Tax Effects on Share-based Compensation |
(14.2) |
(10.8) |
Hedge of the Tax Effects on Share-based Compensation |
1.3 |
0.0 |
Adjusted Net Income (Loss) |
17.0 |
(16.5) |
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 our financial performance despite variations in foreign currency exchange rates,
which may not be indicative of our core operating results and business outlook.
FX Neutral measures are presented because our
management believes that these non-IFRS financial measures can provide useful information to investors, securities analysts and the public
in their review of our operating and financial performance, although they are not calculated in accordance with IFRS or any other generally
accepted accounting principles and should not be considered as a measure of performance in isolation.
The FX Neutral measures were calculated to present
what such measures in preceding periods would have been had exchange rates remained stable from these preceding periods until the date
of the Company's most recent financial information.
The FX Neutral measures for the three months
ended June 30, 2021 were calculated by multiplying the as reported amounts of Adjusted Net Income (Loss) and the key business metrics
for such period by the average Brazilian reais /U.S. dollars exchange rate for the three months ended June 30, 2021 (R$5.209 to US$1.00)
and using such results to re-translate the corresponding amounts back to U.S. dollars by dividing them by the average Brazilian reais/U.S.
dollars exchange rate for the three months ended June 30, 2022 (R$4.988 to US$1.00), so as to present what certain of our statement of
profit and loss amounts and key business metrics would have been had exchange rates remained stable from this past period until the three
months ended June 30, 2022.
The average Brazilian reais/U.S. dollars exchange
rates were calculated as the average of the month-end rates for each month in the three months ended June 30, 2022 and 2021 as reported
by Bloomberg.
FX Neutral measures for deposits and interest-earning
portfolio were calculated by multiplying the as reported amounts as of June 30, 2021, by the spot Brazilian reais/U.S. dollars exchange
rates as of this date (R$4.970 to US$1.00), and using such results to re-translate the corresponding amounts back to U.S. dollars
by dividing them by using the spot rate as of June 30, 2022 (R$5.257 to US$1.00) so as to present what these amounts would have been had
exchange rates been the same as those on June 30, 2021. The Brazilian reais/U.S. dollars exchange rates were calculated using rates as
of such dates as reported by Bloomberg.
FX Rates -
On a monthly basis, Nu translates its subsidiaries figures from their individual functional currency into Nu Holdings functional currency,
the U.S. Dollars ("US$"), following the requirements of IAS 21 "The Effects of Changes in Foreign Exchange Rates".
The functional currency of the Brazilian operating entities is the Brazilian Real ("R$"), of the Mexican entities is the Mexican
Peso ("MXN"), and of the Colombian ("COP") entity is the Colombian Peso.
As of January 31, 2022, income statement figures
were divided by the average FX Rate of the month (R$ 5.5295, MXN 20.5014 and COP 3,998.1929 to US$ 1.00) and balance sheet figures were
divided by the last price fx rate of the month (R$ 5.3102, MXN 20.5336 and COP 3,947.0100 to US$ 1.00).
As of February 28, 2022, income statement figures
were divided by the average FX Rate of the month (R$ 5.1929, MXN 20.4532 and COP 3,937.9400 to US$ 1.00) and balance sheet figures were
divided by the last price FX Rate of the month (R$ 5.1522, MXN 20.4692 and COP 3,937.9400 to US$ 1.00).
As of March 31, 2022, income statement figures
were divided by the average FX Rate of the month (R$ 4.9620, MXN 20.5400 and COP 3,798.9841 to US$ 1.00) and balance sheet figures were
divided by the last price FX Rate of the month (R$ 4.7417, MXN 19.8699 and COP 3,771.0500 to US$ 1.00).
As of April 30, 2022, income statement figures
were divided by the average FX Rate of the month (R$ 4.7543, MXN 20.0793 and COP 4,019.7900 to US$ 1.00) and balance sheet figures were
divided by the last price fx rate of the month (R$ 4.9721, MXN 20.4280 and COP 3,960.9500 to US$ 1.00).
As of May 31, 2022, income statement figures
were divided by the average FX Rate of the month (R$ 4.9513, MXN 20.0219 and COP 3,937.9400 to US$ 1.00) and balance sheet figures were
divided by the last price FX Rate of the month (R$ 4.7336, MXN 19.6571 and COP 3,772.1000 to US$ 1.00).
As of June 30, 2022, income statement figures
were divided by the average FX Rate of the month (R$ 5.0586, MXN 19.9912 and COP 3,941.5970 to US$ 1.00) and balance sheet figures were
divided by the last price FX Rate of the month (R$ 5.2568, MXN 20.1183 and COP 4,155.1100 to US$ 1.00).
Equity figures are translated using the FX Rate
on the date of each transaction.
Profit or Loss
For the three-month period ended June 30, 2022 and 2021
(In thousands of U.S. Dollars, except loss per share)
|
06/30/2022 |
|
06/30/2021 |
|
|
|
|
Interest income and gains (losses) on financial instruments |
853,013 |
|
184,893 |
Fee and commission income |
304,548 |
|
151,195 |
Total revenue |
1,157,561 |
|
336,088 |
Interest and other financial expenses |
(407,500) |
|
(57,236) |
Transactional expenses |
(48,036) |
|
(29,782) |
Credit loss allowance expenses |
(338,492) |
|
(82,668) |
Total cost of financial and transactional services provided |
(794,028) |
|
(169,686) |
Gross profit |
363,533 |
|
166,402 |
|
|
|
|
Operating expenses |
|
|
|
Customer support and operations |
(77,703) |
|
(40,968) |
General and administrative expenses |
(229,505) |
|
(122,295) |
Marketing expenses |
(36,208) |
|
(14,631) |
Other income (expenses) |
(44,729) |
|
4,954 |
Total operating expenses |
(388,145) |
|
(172,940) |
|
|
|
|
Loss before income taxes |
(24,612) |
|
(6,538) |
|
|
|
|
Income taxes |
|
|
|
Current taxes |
(96,249) |
|
(52,248) |
Deferred taxes |
91,011 |
|
43,566 |
Total income taxes |
(5,238) |
|
(8,682) |
|
|
|
|
Loss for the three-month period |
(29,850) |
|
(15,220) |
Loss attributable to shareholders of the parent company |
(29,697) |
|
(15,220) |
Profit attributable to non-controlling interests |
(153) |
|
- |
Loss per share – Basic and Diluted |
(0.0064) |
|
(0.0111) |
Weighted average number of outstanding shares – Basic and Diluted (in thousands of shares) |
4,670,972 |
|
1,366,612 |
Financial Position
As of June 30, 2022 and December 31, 2021
(In thousands of U.S. Dollars)
|
06/30/2022 |
|
12/31/2021 |
Assets |
|
|
|
Cash and cash equivalents |
3,701,020 |
|
2,705,675 |
Financial assets at fair value through profit or loss |
967,329 |
|
918,332 |
Securities |
856,994 |
|
815,962 |
Derivative financial instruments |
109,934 |
|
101,318 |
Collateral for credit card operations |
401 |
|
1,052 |
Financial assets at fair value through other comprehensive income |
8,850,741 |
|
8,163,428 |
Securities |
8,850,741 |
|
8,163,428 |
Financial assets at amortized cost |
10,141,709 |
|
6,982,835 |
Compulsory and other deposits at central banks |
1,552,139 |
|
938,659 |
Credit card receivables |
6,478,470 |
|
4,780,520 |
Loans to customers |
1,675,776 |
|
1,194,814 |
Other credit operations |
374,188 |
|
50,349 |
Other financial assets at amortized cost |
61,136 |
|
18,493 |
Other assets |
331,383 |
|
232,915 |
Deferred tax assets |
598,917 |
|
360,752 |
Right-of-use assets |
21,888 |
|
6,426 |
Property, plant and equipment |
18,658 |
|
14,109 |
Intangible assets |
147,432 |
|
72,337 |
Goodwill |
409,604 |
|
401,872 |
Total assets |
25,188,681 |
|
19,858,681 |
|
06/30/2022 |
|
12/31/2021 |
Liabilities |
|
|
|
Financial liabilities at fair value through profit or loss |
121,978 |
|
102,380 |
Derivative financial instruments |
86,511 |
|
87,278 |
Instruments eligible as capital |
18,554 |
|
12,056 |
Repurchase agreements |
16,913 |
|
3,046 |
Financial liabilities at amortized cost |
19,695,082 |
|
14,706,713 |
Deposits |
13,293,235 |
|
9,667,300 |
Payables to network |
5,930,966 |
|
4,882,159 |
Borrowings and financing |
470,881 |
|
147,243 |
Securitized borrowings |
- |
|
10,011 |
Salaries, allowances and social security contributions |
88,070 |
|
97,909 |
Tax liabilities |
219,905 |
|
241,197 |
Lease liabilities |
25,021 |
|
7,621 |
Provision for lawsuits and administrative proceedings |
17,288 |
|
18,082 |
Deferred income |
36,595 |
|
30,657 |
Deferred tax liabilities |
43,283 |
|
29,334 |
Other liabilities |
203,300 |
|
182,247 |
Total liabilities |
20,450,522 |
|
15,416,140 |
|
|
|
|
Equity |
|
|
|
Share capital |
83 |
|
83 |
Share premium reserve |
4,962,573 |
|
4,678,585 |
Accumulated gain (losses) |
(95,911) |
|
(128,409) |
Other comprehensive income (loss) |
(128,586) |
|
(109,227) |
Equity attributable to shareholders of the parent company |
4,738,159 |
|
4,441,032 |
Equity attributable to non-controlling interests |
- |
|
1,509 |
Total equity |
4,738,159 |
|
4,442,541 |
Total liabilities and equity |
25,188,681 |
|
19,858,681 |
Cash Flows
For the three-month period ended June 31, 2022 and 2021
(In thousands of U.S. Dollars)
|
06/30/2022 |
|
06/30/2021 |
Cash flows from operating activities |
|
|
|
Reconciliation of profit (loss) to net cash flows from operating activities: |
Loss for the three-month period |
(74,854) |
|
(64,703) |
Adjustments: |
|
|
|
Depreciation and amortization |
18,088 |
|
5,242 |
Credit loss allowance expenses |
625,185 |
|
165,815 |
Deferred income taxes |
(212,710) |
|
(78,958) |
Provision for lawsuits and administrative proceedings |
(1,958) |
|
320 |
Losses (gains) on other investments |
(5,067) |
|
- |
Losses (gains) on financial instruments |
38,458 |
|
95,216 |
Interest accrued |
8,907 |
|
4,658 |
Share-based payments granted |
135,656 |
|
53,512 |
|
531,705 |
|
181,102 |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
Securities |
(773,539) |
|
(1,238,495) |
Compulsory deposits and others at central banks |
(635,319) |
|
(204,739) |
Credit card receivables |
(2,459,157) |
|
(1,066,399) |
Loans to customers |
(1,145,997) |
|
(426,329) |
Other credit operations |
(335,367) |
|
- |
Interbank transactions |
- |
|
(4,106) |
Other assets |
(145,172) |
|
(1,353) |
Deposits |
3,755,012 |
|
1,579,763 |
Payables to network |
1,086,143 |
|
608,114 |
Deferred income |
6,149 |
|
5,216 |
Other liabilities |
230,430 |
|
128,811 |
|
|
|
|
Interest paid |
(8,274) |
|
(6,707) |
Income tax paid |
(234,444) |
|
(24,557) |
Interest received |
670,462 |
|
196,222 |
Cash flows (used in) generated from operating activities |
542,632 |
|
(273,457) |
|
06/30/2022 |
|
03/31/2021 |
Cash flows from investing activities |
|
|
|
Acquisition of property, plant and equipment |
(7,425) |
|
(2,010) |
Acquisition of intangible assets |
(45,611) |
|
(3,492) |
Acquisition of subsidiary, net of cash acquired |
(10,346) |
|
(108,993) |
Acquisition of securities - equity instruments |
(2,500) |
|
- |
Cash flow (used in) generated from investing activities |
(65,882) |
|
(114,495) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Issuance of preferred shares |
- |
|
800,000 |
Issuance of shares on IPO over-allotment |
36,671 |
|
- |
Transactions costs from IPO over-allotment |
247,998 |
|
- |
Payments of securitized borrowings |
(3,985) |
|
- |
Proceeds from borrowings and financing |
(10,633) |
|
(33,261) |
Payments of borrowings and financing |
353,878 |
|
26,955 |
Lease payments |
(38,305) |
|
(60,244) |
Exercise of stock options |
(2,416) |
|
(2,197) |
Shares repurchased |
3,304 |
|
6,579 |
Cash flows (used in) generated from financing activities |
586,512 |
|
737,832 |
Increase (decrease) in cash and cash equivalents |
1,063,262 |
|
349,880 |
|
|
|
|
Cash and cash equivalents |
|
|
|
Cash and cash equivalents - beginning of the year |
2,705,675 |
|
2,343,780 |
Foreign exchange rate changes on cash and cash equivalents |
(67,917) |
|
(31,193) |
Cash and cash equivalents - end of the year |
3,701,020 |
|
2,662,467 |
Increase (decrease) in cash and cash equivalents |
1,063,262 |
|
349,880 |
About Nu Holdings Ltd.
Nu is one of the world’s largest
digital banking platforms, serving over 65 million customers across Brazil, Mexico and Colombia. As one of the leading technology companies
in the world, Nu leverages proprietary technologies and innovative business practices to create new financial solutions and experiences
for individuals and SMEs that are simple, intuitive, convenient, low-cost, empowering and human. Guided by a mission to fight complexity
and empower people, Nu is fostering the access to financial services across Latin America, connecting profit and purpose to create value
for all stakeholders and have a positive impact on the communities it serves. For more information, please visit www.nubank.com.br
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Nu Holdings Ltd. |
|
|
|
By: |
/s/ Guilherme Lago |
|
|
Guilherme Lago Chief Financial Officer |
Date: August
15, 2022
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