From Credit Card Company to Lender
Three years after its December 2021 IPO (see nu/2021-12), Nu Holdings' third quarter of 2024 - three months ended September 30, 2024 - is less a story about growth continuing (it is: record $2,943.2 million revenue, up 37.8% year-over-year in nominal U.S. dollars, +56% FX-neutral») and more a story about what kind of business Nu is becoming. Management disclosed on the earnings call that Brazil alone crossed 100 million customers "in the past days" before the call - a genuinely large milestone for a market of roughly 165 million adults - and that the consumer finance portfolio (credit cards plus lending) reached $20.9 billion, up 47% year-over-year FX-neutral. But inside that portfolio, the mix has shifted hard: the personal lending book grew 97% year-over-year FX-neutral to $5.7 billion (now 27% of the consumer finance portfolio, up from a smaller share a year ago), while the credit card book - the product that built Nu's brand - grew only 33% FX-neutral to $15.2 billion. On the balance sheet itself, filed loans to customers (personal loans, IFRS classification) grew 54.2% year-over-year to $4,939.4 million while credit card receivables grew just 2.2% to $12,689.2 million.
That's not a company simply adding more of the same product to more people. It's a bank whose incremental growth is now coming disproportionately from a newer, still-smaller lending line rather than the card business the market still associates with the Nu brand - and it's happening at the same time Nu is running a genuinely capital-intensive international expansion. Mexico's operation closed the quarter at $3.9 billion in deposits; Colombia's checking-account product, launched just one quarter earlier, already had $900 million in consumer deposits. Funding both of those with above-market deposit rates to win share quickly is a deliberate, disclosed strategy - CFO Guilherme Lago said explicitly on the call that deposit-rate pressure in Mexico and Colombia is "in line with our depo rates strategy" - but it's also why group-level net interest margin compression shows up even as Brazil's own core economics keep improving (see Key Financial Metrics).
The Prescription
Nu should keep leaning into the personal-lending shift, not retreat from it. A credit card business monetizes an existing relationship; a well-underwritten personal loan book monetizes the same relationship at a structurally better margin once Nu's data advantage (years of transaction history on tens of millions of already-scored customers) is doing the underwriting instead of a first-time risk model - which is exactly the 97% FX-neutral growth rate showing up this quarter. The credit card business isn't declining, it's just no longer where the marginal dollar of growth capital should go first, and a company still calling itself a "digital bank" rather than a "credit card company" should let its balance sheet mix say so.
What Nu should stop doing: running the Mexico and Colombia deposit-rate strategy as an undifferentiated blunt instrument once each market's early customer-acquisition phase ends. Paying above-market rates to win deposits fast is a legitimate land-grab tactic when a market is new and unproven (Colombia's $900 million in one quarter is real evidence it works) - but it's also the single biggest drag on group profitability disclosed this quarter, and management's own answer on the call ("we have been...reducing some of those deposit rates...sequentially") shows they already know the rate needs to come down as the deposit base matures. The risk is moving too slowly on that glide path once the land-grab phase is over, since every extra quarter of above-market rates in a market that's already won is pure margin given away for free.
Key Financial Metrics
Q3 2024 vs. Q3 2023, consolidated, reported in USD - Nu reports natively in US dollars, so no FX conversion is needed
| Metric | Q3 2024 | Q3 2023 | YoY |
|---|---|---|---|
| Total revenue | $2,943.2M | $2,136.8M | +37.8% nominal (+56% FX-neutral) |
| Gross profit | $1,348.6M | $914.8M | +47.4% (margin: 45.8% vs. 42.8%) |
| Total operating expenses | $624.8M | $503.3M | +24.2% |
| Profit before income taxes | $723.8M | $411.5M | +75.9% |
| Profit for the period (Net Income) | $553.4M | $303.0M | +82.6% |
| Adjusted Net Income, non-IFRS | $592.2M | $355.6M | +66.6% nominal (+89% FX-neutral) |
| Adjusted Annualized ROE» | 33% | n/a (not disclosed this quarter's prior-year comparative) | Strong for a 12-year-old bank |
| Total cash and cash equivalents (quarter-end) | $7,645.8M | $3,213.6M | +138.0% |
Nine-month cumulative figures (Nu's 6-K discloses cash flow only cumulatively, not by standalone quarter)
| Cash flow metric | 9M 2024 | 9M 2023 | Change |
|---|---|---|---|
| Net cash from (used in) operating activities | $1,028.9M | $(1,440.3)M | Swung positive |
| Balance sheet metric | Sep 2024 | Dec 2023 | Change |
|---|---|---|---|
| Total assets | $48,637.9M | $43,345.2M | +12.2% |
| Total liabilities | $40,993.5M | $36,938.8M | +11.0% |
| Total equity | $7,644.3M | $6,406.4M | +19.3% |
| Deposits | $28,319.1M | $23,691.1M | +19.5% |
| Credit card receivables | $12,689.2M | $12,414.1M | +2.2% - see above |
| Loans to customers (personal loans) | $4,939.4M | $3,202.3M | +54.2% |
Net Interest Income and Fee & Commission Income aren't broken out as standalone line items in the interim statements; both roll into the revenue and cost-of-services lines above.
Operational Metrics
- Total customers: 109.7 million (+23% YoY), of which 91.7 million active customers (+24% YoY, "active" meaning revenue-generating in the last 30 days) - Brazil alone crossed 100 million customers during the quarter.
- Monthly activity rate: 83.6%, essentially flat sequentially and year-over-year - a high-80s ceiling Nu has held for several quarters now.
- Monthly ARPAC»: $11.0, down 2 cents sequentially in nominal dollars but +25% year-over-year FX-neutral, from $10.0 a year ago.
- Consumer finance portfolio (credit cards + personal lending): $20.9 billion, +47% YoY FX-neutral.
- Credit cards: $15.2 billion, +33% YoY FX-neutral, +4% sequentially.
- Personal lending: $5.7 billion, +97% YoY FX-neutral, +19% sequentially - now 27% of the combined portfolio.
- Mexico: $3.9 billion in deposits at quarter-end; still pre-profitability, disclosed as an investment-phase market.
- Colombia: $900 million in consumer deposits, one quarter after its checking-account product launched.
Beyond the Usual
A Rewards Program That Never Expires
Nu's credit card rewards programs ("Nubank+" and "Ultravioleta") accrue points that customers can redeem for cashback or air miles, and the footnotes disclose something a reader wouldn't get from the deck: the points do not expire, and there is no limit on how many an eligible cardholder can earn. Nu carries a $71.3 million deferred-revenue liability against future redemptions, estimated using historical redemption-rate models rather than a hard cap - a genuinely open-ended future liability whose size depends entirely on how conservative that model turns out to be as the loyalty base ages and accumulates un-redeemed points over many years.
A Director's Company on the Other Side of a Commercial Deal
A related-party footnote discloses that in Q2 2024, Nu "entered into a commercial relationship with a company where one of its Directors serves as CEO." Nu received a cash incentive under the arrangement, to be recognized as a reduction in intangible costs once certain conditions are satisfied. The filing doesn't name the counterparty, the dollar size of the incentive, or the conditions - only a $2,500 thousand net liability shows up in the related-party balances table. That's a legitimate, disclosed transaction, not an accusation of wrongdoing, but a governance detail worth tracking: a sitting director's own company transacting commercially with Nu is exactly the kind of arrangement that deserves more disclosure than a one-line footnote provides, especially if the relationship grows.
Judicial Deposits Still Tied to the Nu Invest Acquisition
Nu still carries $4.5 million in judicial deposits connected to a pre-acquisition tax dispute involving the former shareholders of Nu Invest (the brokerage Nu acquired in 2022) over withholding taxes on employee payments. Three years after the deal closed, this legacy liability is still working its way through Brazil's courts - a reminder that an acquisition's legal tail can run far longer than the headline integration story suggests.
Modest, Stable Contingent Litigation
Total possible-loss (not probable, not accrued) civil and labor lawsuits stood at roughly $21.2 million combined as of September 30, 2024 (up from about $26.5 million at year-end 2023, so actually down slightly) - a small number relative to Nu's $48.6 billion balance sheet, and stable rather than growing, which is itself useful context given how large Nu's customer base has become.
What Management Emphasized on the Call
CEO David Vélez and CFO Guilherme Lago used the call to frame Q3 2024 around three things: the Brazil customer-count milestone (100 million, crossed just before the call), the early results from Mexico and Colombia's deposit-led expansion strategy, and the launch of NuCel (Nu's debut into telecom, alongside travel products and NuMarketplace) as evidence the platform keeps adding non-financial services on top of the core banking relationship. On credit quality and funding costs - the topic analysts pushed hardest on - management's answer was consistent: deposit rates in Mexico and Colombia are elevated by design during each market's land-grab phase, and the team is already "reducing some of those deposit rates...sequentially" as the funding base matures, rather than treating the elevated rate as a permanent feature. Management didn't address the Nu Invest judicial deposit or the director-affiliated commercial arrangement flagged in Beyond the Usual on the call - neither is the kind of detail that comes up in prepared remarks or analyst Q&A unless a number moves materially.
Stock Price: Up Roughly 210% in Two Years
Nu's share price closed September 30, 2024 at $13.65, up from $4.40 two years earlier (September 30, 2022) - a roughly 210% move that comfortably clears this project's threshold for a dedicated section. Most of that gain happened in a single stretch: the stock was still around $7-8 through most of 2023, then rose steadily from $8.61 in January 2024 to a 2024 peak of $14.97 in August before easing slightly to $13.65 at quarter-end. That run tracks Nu's own operating improvement almost one-for-one - each 2024 quarter posted record revenue and accelerating net income - rather than a speculative re-rating disconnected from the numbers, which is the more encouraging read for a reader trying to separate genuine business momentum from market mood.
Target Valuation Range
Verdict: too early to call against peers; the multiple is rich but sits below last quarter on a different basis. At a ~$65.6 billion market cap and ~$59.5B enterprise value, Nu trades at ~5.1x annualized-run-rate EV/Revenue and ~29.6x annualized-run-rate P/E, against ~5.7x and ~40.3x on a TTM basis last quarter. The bases differ, so the two quarters are not directly comparable, and the table lists no peers.
With 4,806,594,533 total shares issued as of September 30, 2024 (3,755,127,391 Class A, 1,051,467,142 Class B) and a $13.65 closing price. No stock split falls within the two-year price window used here, so these figures are on an unadjusted share-count basis.
| Market cap → enterprise value | Q3 2024 |
|---|---|
| Share price (period-end) | $13.65 |
| Shares outstanding | 4,806,594,533 |
| Market capitalization | ~$65.6B |
| Total liabilities | n/a (net cash basis used) |
| Less: cash and equivalents | $7,645.8M (vs. $1,498.9M borrowings and financing) |
| Enterprise value | ~$59.5B |
| Peer-multiple sanity check | Q2 2024 | Q3 2024 | Change |
|---|---|---|---|
| Revenue basis | TTM | Annualized Q3 run-rate | - |
| Enterprise value | ~$57.5B | ~$59.5B | up |
| EV/Revenue | ~5.7x (TTM) | ~5.1x (annualized run-rate) | - basis differs, not directly comparable |
| P/E | ~40.3x (TTM) | ~29.6x (annualized run-rate) / ~27.7x (Adjusted Net Income) | - basis differs, not directly comparable |
| P/B | n/a | ~8.6x | - |
At a $65.6 billion market cap and a Brazil-only run-rate of roughly $2.2 billion in annualized net income (annualizing Q3's $553.4 million), the blended multiple is roughly 30x annualized earnings, with 37.8% nominal revenue growth and a 33% adjusted ROE behind it. Mexico and Colombia are still pre-profitability by design, which is why the multiple sits above what a mature, Brazil-only digital bank would otherwise command.
Nu Holdings Ltd.'s unaudited interim condensed consolidated financial statements as of and for the three- and nine-month periods ended September 30, 2024 (furnished to the SEC as an exhibit to a Form 6-K, including the independent auditors' review report and explanatory notes), its Third Quarter 2024 Results earnings presentation, and its Q3'24 earnings conference call transcript (all dated on or around November 13, 2024).