NU Nu's Reported Revenue Growth Just Halved. The Real Number Didn't.

A Slowdown That Isn't One

Nu Holdings' first quarter of 2025 - three months ended March 31, 2025 - is the kind of quarter that looks alarming at first glance and much less so on a second read. Nominal revenue growth fell to $3,247.7 million, up just 18.7% year-over-year from $2,735.9 million in Q1 2024 - roughly half the 37-43% nominal growth rates Nu posted every quarter of 2024 (see nu/2024-09 and nu/2024-12). But on Nu's own FX-neutral^» basis - stripping out currency movement between the comparison periods - revenue actually grew 40% year-over-year, essentially unchanged from the prior quarters' pace. The gap between those two numbers is almost entirely the Brazilian real, which weakened sharply against the U.S. dollar in the first quarter of 2025 (part of a broader emerging-market currency move, not something specific to Nu or Brazil's banking sector). A reader skimming only the headline nominal figure would conclude Nu's growth engine cooled meaningfully; a reader who checks the FX-neutral figure - which this post treats as the more decision-useful number precisely because it's what management itself uses to run the business - finds a business growing exactly as fast as before.

That doesn't mean nothing changed. Net interest margin (NIM), which first cracked in Q4 2024 (see nu/2024-12), compressed again - down another 20 basis points sequentially to 17.5%. Nu's own NIM bridge disclosure this quarter is unusually specific about why: Brazil's credit card book added 30 basis points and Brazil's lending book added another 60 basis points to NIM quarter-over-quarter, but Mexico and Colombia's continued deposit-rate-premium strategy subtracted 110 basis points - more than offsetting Brazil's own improvement. That's the clearest evidence yet that the margin story flagged last quarter isn't a one-off: Brazil's core economics keep getting better, and the group-level number keeps getting dragged down anyway by the cost of winning share fast in two much younger markets. Credit card receivables also rebounded this quarter (+10.5% quarter-over-quarter to $13,540.7 million, after barely growing across all of 2024), while personal lending kept outpacing it at +28.0% to $6,812.7 million - the same lending-over-cards mix shift first identified in nu/2024-09, just with cards no longer standing still.

The Prescription

Nu should keep disclosing the NIM bridge at this level of granularity every quarter, not just this one. Breaking the sequential NIM change into "Brazil credit cards," "Brazil lending," and "Mexico & Colombia" components is exactly the kind of disclosure that lets a reader tell a temporary, disclosed strategic cost apart from a genuine deterioration in underlying unit economics - and this quarter's bridge does that job well, showing Brazil improving while the international expansion is the entire drag. Keeping this breakdown as a standing quarterly disclosure (not just a one-time response to Q4's questions) would let the market actually track whether management's "temporary" framing from nu/2024-12 is holding up, quarter by quarter, instead of taking it on faith.

What Nu should stop doing: letting the nominal-versus-FX-neutral growth gap go unaddressed in its own headline framing. Nu's press materials lead with FX-neutral growth rates throughout, which is defensible as the cleaner operating metric - but a US-dollar-reporting company whose reported (nominal) growth rate can look cut in half purely on currency movement owes investors an explicit, front-and-center reconciliation of the two numbers, not just a footnote disclaimer that FX-neutral figures exist. A reader unfamiliar with Nu's FX-neutral convention could easily read this quarter's headline number as a real business deceleration when it isn't one.

Key Financial Metrics

Q1 2025 vs. Q1 2024, consolidated, reported in USD - Nu reports natively in US dollars, so no FX conversion is needed

Metric	Q1 2025	Q1 2024	YoY
Total revenue	$3,247.7M	$2,735.9M	✅ +18.7% nominal (+40% FX-neutral)
Gross profit	$1,319.5M	$1,181.5M	⚠️ +11.7% (margin: 40.6% vs. 43.2%)
Total operating expenses	$523.3M	$603.0M	✅ -13.2%
Profit before income taxes	$795.1M	$578.5M	✅ +37.4%
Net income for the period	$557.2M	$378.8M	✅ +47.1%
Adjusted Net Income, non-IFRS	$606.5M	$442.7M	✅ +37.0% nominal (+62% FX-neutral)
Net interest margin (NIM)»	17.5%	n/a	⚠️ -20bps sequentially - second straight quarter of compression

Balance sheet metric	Mar 2025	Dec 2024	Change
Total assets	$54,192.5M	$49,931.2M	✅ +8.5%
Total liabilities	$45,583.6M	$42,284.1M	⚠️ +7.8%
Total equity	$8,608.9M	$7,647.1M	✅ +12.6%
Deposits	$31,564.4M	$28,855.1M	✅ +9.4%
Credit card receivables	$13,540.7M	$12,259.3M	✅ +10.5% - rebounded, see above
Loans to customers (personal loans)	$6,812.7M	$5,321.9M	✅ +28.0%

Operational Metrics

• Total customers: 119 million, adding 4.3 million in the quarter alone (+19% YoY) - 105 million in Brazil, 11 million in Mexico, and just over 3 million in Colombia (crossed the month before the call).
• Active customers: nearly 100 million (+19% YoY), activity rate held above 83%.
• Monthly ARPAC^»: $11.2, essentially flat sequentially from Q4's $11.0. Nu's own slide compares this to an estimated $43.3 incumbent-bank ARPAC in Brazil - a nearly 4x gap Nu frames as its own monetization runway, not a weakness.
• NIM bridge (sequential, Q4'24 to Q1'25): Brazil credit cards +30bps, Brazil lending +60bps, Mexico & Colombia -110bps, net -20bps to 17.5%.
• Interest-earning portfolio: $13.8 billion added, +62% YoY FX-neutral.

Beyond the Usual

The Same Director-Affiliated Deal, Now in Its Third Consecutive Filing

The related-party arrangement first disclosed in nu/2024-09 and repeated in nu/2024-12 appears again here, still with the identical description: a Q2 2024 commercial relationship "with a company where one of its Directors serves as CEO," still unnamed, still without a disclosed dollar size for the underlying incentive - only a $1.7 million net liability shows in the related-party table, roughly flat from the prior two filings. Three consecutive quarterly/annual filings repeating the same minimal disclosure without adding the counterparty's name or the arrangement's actual terms is no longer just a single-quarter ambiguity - it's a pattern worth Nu's audit committee or board actually addressing with fuller disclosure, given how easy it would be to simply name the company involved if there's nothing more to it than the filing suggests.

A New Line Item: Nu Is Now Buying Mexican Government Bonds

A footnote on "Other liabilities" notes that as of March 31, 2025, a $232.8 million liability balance is "primarily related to amounts payable arising from the purchase of Mexican government bonds" - a new disclosure that didn't appear in this form in the prior year-end filing (where the equivalent balance was mostly Nucoin-redemption provisions and Nu Investimento customer funds instead). It's a small, technical settlement-timing liability, not a strategic announcement, but it's a concrete data point that Nu's Mexican operation is now large enough to be actively managing a government-securities portfolio as part of its balance sheet - the kind of activity a maturing, licensed bank does, not a young market-entry operation.

Contingent Litigation Ticked Up Slightly, Still Small

Total possible-loss (not probable, not accrued) civil and labor lawsuits rose to approximately $22.8 million combined as of March 31, 2025, up from about $20.4 million at year-end 2024 - a modest increase, and still a small number next to Nu's now-$54.2 billion balance sheet.

The Nu Invest Judicial Deposit Keeps Growing, Slowly

The judicial deposit tied to the pre-acquisition Nu Investimento tax dispute (first flagged in nu/2024-09) rose again, to $6.1 million from $5.7 million at year-end 2024 - a small, steady increase suggesting the underlying dispute is still actively accruing rather than nearing resolution, more than three years after the acquisition closed.

What Management Emphasized on the Call

CEO David Vélez opened by framing Q1 2025 around customer-growth momentum across all three markets (4.3 million net adds, Colombia crossing 3 million) and "deepening principality" - customers using Nu as their primary bank - as the theme investors should track alongside raw customer counts. On the NIM question specifically, management's answer built directly on the "temporary, self-correcting" framing first given in nu/2024-12: this quarter's NIM bridge disclosure was itself the evidence offered that Brazil's core business keeps improving even as Mexico/Colombia funding costs keep weighing on the consolidated number. Management didn't address the recurring director-affiliated related-party arrangement or the Nu Invest judicial deposit flagged in Beyond the Usual on the call - neither is the kind of line item that comes up unless an analyst asks directly, and none did this quarter either.

Stock Price: A Second Straight Quarter of Giving Back Gains

Nu's share price closed Q1 2025 at $10.24, down from $13.24 at the end of January 2025 and essentially flat versus the $10.36 close at year-end 2024 - meaning the entire January rally reversed over February and March. Over the full two-year window (March 2023's $4.76 to March 2025's $10.24), the stock is still up roughly 115%, comfortably above this project's threshold for its own section - but the near-term pattern (a fourth-quarter pullback from October 2024's $15.09 high, followed by a second flat-to-down quarter) is now a two-quarter trend, not a one-time correction. That's consistent with a market that's continuing to digest the NIM story in real time rather than having already fully priced it after Q4's report.

Target Valuation Range

Fair-value read: today's ~$49.4 billion market cap (~20-22x trailing earnings) still looks reasonable and is modestly cheaper than the ~23x implied at year-end 2024 - the underlying business is still executing at its historical pace on an FX-neutral basis, so this reads as the market pricing in NIM-compression risk again this quarter, not as evidence the growth story itself is breaking.

With 4,824,406,511 total shares issued as of March 31, 2025 and a $10.24 closing price:

Market cap → enterprise value	Q1 2025
Share price (period-end)	$10.24
Shares outstanding	4,824,406,511
Market capitalization	~$49.4B
Total liabilities	n/a (net cash basis used)
Less: cash and equivalents	$10,284.0M (vs. $1,706.9M borrowings and financing)
Enterprise value	~$40.8B

Market cap is essentially flat versus the ~$49.9 billion implied at year-end 2024 (see nu/2024-12), since the share price barely moved over the quarter.

Peer-multiple sanity check	FY2024	Q1 2025	Change
Enterprise value	~$42.4B	~$40.8B	✅ down slightly
EV/Revenue	~3.7x	~3.1x (annualized run-rate)	✅ down
P/E	~25.3x (TTM) / ~22.6x (Adjusted Net Income)	~22.2x (annualized run-rate) / ~20.4x (Adjusted Net Income)	✅ down
P/B	~6.5x	~5.7x	✅ down

The reverse-DCF read from nu/2024-12 still applies directionally: at a ~$49 billion market cap against a ~20-22x trailing-earnings multiple, the market is pricing in continued earnings growth without yet being convinced the NIM compression has stopped - and this quarter's numbers don't resolve that question either way. The FX-neutral growth rate held at 40%, which is exactly what a reader needed to see to keep believing the underlying business hasn't slowed; the NIM bridge showing Brazil improving while Mexico/Colombia drag the average is exactly what a reader needed to see to keep believing the margin story is a temporary, self-inflicted cost rather than a structural problem. Both held up this quarter. The next couple of quarters - specifically whether the Mexico/Colombia NIM drag actually narrows the way management keeps saying it will - remain the thing to watch before concluding either way.

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