NU Nu Introduced a New P&L Framework the Same Quarter Its Growth Rate Needed Flattering

A Genuinely Strong Year, Reported Two Ways

Nu Holdings closed its fourth full year as a public company - the year ended December 31, 2025 - with numbers that don't need embellishing: IFRS total revenue of $15,774.8 million (+37.0% YoY), net income of $2,868.9 million attributable to shareholders (+45.5% YoY), and a record 33% annualized ROE^» in the fourth quarter. The customer base crossed 131 million (+15% YoY, +17 million net adds for the year), and ARPAC^» reached $15 in Q4, up 27% YoY. This is, on every audited number, one of Nu's best years since the 2021 IPO chronicled in nu/2021-12.

Which makes it a strange year for Nu to introduce - starting with this same Q4'25 release - a new "Managerial P&L" non-IFRS reporting framework, reviewed by KPMG under a limited-assurance engagement, that restates the same quarter's results at a higher revenue figure than the audited IFRS statements show: $16,319.6 million in Managerial revenue for FY2025 against $15,774.8 million IFRS, a $544.8 million (3.5%) gap, and $4,857.3 million in Managerial Q4 revenue against a derived IFRS Q4 figure of roughly $4,685.9 million (revenue for the year less the first nine months as filed), a 3.7% gap. Pre-tax profit shows a larger divergence: $4,378.3 million Managerial EBT for FY2025 against $3,868.4 million IFRS profit before income taxes - a $509.9 million (13.2%) gap. Net income is identical on both bases ($2,871.7 million total for the year) because the Managerial P&L's income tax line is correspondingly $509.9 million higher than the IFRS tax charge - the methodology note describes this as a "tax equivalency adjustment," a legitimate technique for grossing up tax-exempt income for comparability, but one whose net effect this year is that every growth-rate headline in the earnings release (revenue, gross profit margin, EBT margin) is quoted on the more flattering Managerial basis, in a year where the underlying IFRS numbers were already strong enough not to need it (see Beyond the Usual).

The Prescription

Nu should keep doing what's driven this entire year: converting engagement into monetization without letting cost to serve creep up. Full-year ARPAC growth continues to outrun customer growth, and the FY2025 efficiency ratio (operating expenses as a share of gross profit) improved to 19.9% in Q4 from 20.3% in Q3 - genuine, measurable operating leverage, the same mechanism flagged as the core thesis since nu/2022-03. Share-based compensation, worth tracking since it consumed 20% of revenue in nu/2021-12's first year as a public company, is now $329.5 million for the full year - just 2.1% of FY2025 revenue, down from $372.7 million (3.2% of revenue) in FY2024. That's the compounding-improvement story playing out almost exactly as the earliest posts on this blog hoped it would.

What Nu should stop doing: reporting a new non-IFRS framework's numbers with equal or greater prominence than the audited IFRS figures in the same release, in a year when the IFRS numbers were already excellent. A 37% IFRS revenue growth rate and a 45.5% IFRS net income growth rate need no help from a reclassification exercise that reports revenue $545 million higher than what the audited financial statements show. Nu should either lead every future release with the IFRS figures and present Managerial P&L strictly as a secondary reconciliation table (which the KPMG assurance report and reconciliation bridge already exist to support), or explain, in the earnings release itself rather than only in a footnoted methodology note, exactly why comparability requires a $545 million revenue add-back - not just that the framework exists and is independently assured.

Key Financial Metrics

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

Metric	FY 2025	FY 2024	YoY
Total revenue	$15,774.8M	$11,517.1M	✅ +37.0%
Gross profit	$6,625.0M	$5,252.8M	⚠️ +26.1% (margin: 42.0% vs. 45.6% - see note below)
Total operating expenses	$(2,752.9)M	$(2,457.7)M	✅ +12.0%, well below revenue growth
Profit before income taxes	$3,868.4M	$2,795.2M	✅ +38.4%
Net income for the year	$2,871.7M	$1,972.1M	✅ +45.6%
Net income attributable to shareholders	$2,868.9M	$1,972.1M	✅ +45.5%
Total assets (year-end)	$74,893.9M	$49,931.2M	✅ +50.0%
Total equity (year-end)	$11,321.6M	$7,647.1M	✅ +48.1%
Deposits (year-end)	$41,925.1M	$28,855.1M	✅ +45.3% (+29% YoY FXN per company)

Gross margin compressed from 45.6% to 42.0% - a continuation of the funding-cost and mix-shift dynamics documented quarter by quarter in nu/2025-06 and nu/2025-09: elevated Brazilian interest rates raising the dollar cost of BRL-denominated funding, partly offset by a deliberate shift toward lower-risk, lower-yield lending that improved risk-adjusted margins rather than raw ones.

Isolating the fourth quarter alone (FY2025 total less the first nine months, as filed in nu/2025-09): Q4'25 IFRS revenue was approximately $4,685.9 million and net income (total, including non-controlling interests) approximately $894.8 million - up roughly 56.8% and 61.9% nominal YoY respectively against a derived Q4'24 base of $2,989.3 million revenue and $552.6 million net income. Both of those year-over-year growth rates are meaningfully higher than the 45% and 50% (FXN, Managerial-basis) growth rates the company itself highlighted for Q4 - a case where the company's own preferred framing actually understates the quarter's real nominal growth, not the reverse, since the FXN adjustment moves the comparison the other direction when the real weakens as sharply as it did across 2025.

Key Operational Metrics

• Customers: 131.0 million globally (+15.0% FXN YoY, +17 million net adds for the year - a record annual figure). Brazil: 113 million (62% of the adult population, record 86% activity rate, now the largest private financial institution in Brazil by customer count, having overtaken the state-owned incumbents this year); Mexico: serves ~15% of the adult population and is the leading issuer of new credit cards; Colombia: surpassed 4 million customers.
• Monthly ARPAC: $15 in Q4'25, up ~9% QoQ and ~27% YoY FXN, from $11.1 a year earlier.
• Monthly cost to serve per active customer: $0.80, still below $1.00; efficiency ratio improved to 19.9% in Q4 from 20.3% in Q3.
• Asset quality: 15-90 day NPL^» ratio fell 20bps QoQ to 4.1% in Q4, aided by the seasonal 13th-salary bonus payout in Brazil; 90+ NPL ratio fell 10bps to 6.6%.
• Balance sheet and funding: total credit portfolio reached $32.7 billion (+40% YoY, +11% QoQ), against deposits of $41.9 billion and total available funding of $38.8 billion - roughly twice the net credit portfolio of $19.0 billion, per management, a comfortable liquidity cushion. Total capital at the holding level was $8.9 billion, including $3.0 billion of cash and equivalents held directly at Nu Holdings and $2.2 billion of excess capital in operating entities.
• Net Interest Income and margin: Q4 NII reached a new all-time high of $2.8 billion (+13% QoQ); risk-adjusted NIM closed the quarter at 10.5%, though management flagged this would have been roughly flat QoQ absent a one-off contribution to Prosofipo, a Mexican sector-wide deposit-protection fund all Sofipos (Mexican non-bank financial entities) are required to fund.
• Segment/geography: still a single reportable operating segment. The annual report's geographic revenue footnote shows Brazil at $11,038.3 million, Mexico at $808.1 million, and other countries at $237.3 million for FY2025 (a subset of total revenue that excludes centrally-booked interest income not attributed to a country) - Brazil is roughly 91.4% of that disclosed geographic split, essentially unchanged from the quarterly splits shown across nu/2025-06 and nu/2025-09.

Beyond the Usual

A new non-IFRS "Managerial P&L" reports higher revenue and pre-tax profit than the audited statements, introduced the same quarter growth needed no help

Starting with Q4'25, Nu introduced a KPMG-assured "Managerial P&L" that reclassifies IFRS line items using an internal "tax equivalency adjustment" methodology. The effect: FY2025 Managerial revenue of $16,319.6 million versus $15,774.8 million IFRS (a $544.8 million gap), and Managerial EBT of $4,378.3 million versus $3,868.4 million IFRS profit before taxes (a $509.9 million gap) - both entirely offset in the tax line, so net income is identical on either basis. The earnings release quotes FY'25 revenue growth as "45% YoY" using the Managerial figure ($16.3 billion) rather than the IFRS figure's 37.0% growth rate - a real, legitimate accounting methodology, independently assured, but one introduced in the same quarter that IFRS growth was already running well above peer averages, and one that makes every headline revenue and margin comparison from this quarter forward not directly comparable to the IFRS-only figures used in every prior Nu post on this blog. Future Nu posts on this blog will need to state explicitly which basis (IFRS or Managerial) a given growth rate uses, rather than assuming the two are interchangeable going forward.

Nu just advanced $186 million to Brazil's deposit insurance fund after the Central Bank liquidated other banks

As a subsequent event (February-March 2026), Brazil's Fundo Garantidor de Créditos (FGC) - the deposit insurance fund Nu and other member banks fund collectively - approved an emergency recapitalization plan after the Central Bank of Brazil liquidated certain member banks, requiring all member institutions to advance contributions over a multi-year period. Nu advanced US$186.4 million to the FGC on March 25, 2026 pursuant to this plan. This isn't a finding about Nu's own credit quality or governance - it's disclosed as an industry-wide event Nu is a mandatory participant in - but a sector-wide bank liquidation serious enough to require an emergency deposit-insurance-fund recapitalization is a systemic-risk data point worth watching in Brazil's banking sector generally, independent of how Nu itself is performing.

Nu received conditional U.S. federal bank charter approval

As a subsequent event, on January 29, 2026, Nu received conditional approval from the U.S. Office of the Comptroller of the Currency (OCC) to form Nubank N.A., a national bank - following an application submitted September 30, 2025. Once final conditions are satisfied, the charter would let Nu operate under a full federal U.S. banking framework, offering deposit accounts, credit cards, lending products, and digital-asset custody directly in the United States - a genuinely new market for a company whose entire operating history to date has been Brazil, Mexico, and Colombia. This is the earliest concrete, regulator-confirmed evidence of the U.S. expansion ambition Vélez gestured toward in nu/2025-09's and earlier calls' "global digital banking platform" framing.

A tripling of judicial deposits tied to a pre-acquisition tax dispute

Judicial deposits (recorded within "Other assets") jumped from $31.1 million at year-end 2024 to $92.7 million at year-end 2025 - a roughly 3x increase in one year. The 20-F attributes this "substantially" to a judicial deposit held on behalf of the former shareholders of Nu Investimento (an entity Nu previously acquired) tied to a withholding-tax dispute on employee payments predating the acquisition. It's not Nu's own tax exposure in substance - it's collateral tied to a legacy dispute from a company Nu bought - but the scale of the increase is large enough that a reader tracking Nu's "Other assets" line year over year should know why it moved so much.

Nu's credit-card rewards programs ("Nubank+" and "Ultravioleta") carry $76.3 million of deferred revenue at year-end, up from $69.4 million - and, notably, points under these programs never expire and have no earning cap, meaning the deferred-revenue liability will keep growing indefinitely as more customers accumulate unredeemed points, a detail a reader wouldn't know from the headline numbers alone. Full-year management compensation (board and executive officers) was $91.3 million, down slightly from $96.0 million in FY2024 despite the company's substantially stronger year - a rare instance of a growth company's insider compensation actually falling in its best year yet.

Target Valuation Range

Reverse-DCF: at an $82.2 billion market cap, the market requires ~19-22% sustained annual earnings growth for 7-8 years - Nu delivered 45.6% net income growth this year, more than double what's priced in, arguably cheap on that basis, though that pace can't structurally continue for a full 7-8 year horizon given a maturing loan book and home market.

Nu's stock closed out the two-year window ending with this quarter having roughly doubled: from around $8.61 (January 2024) to a 2025 high of $17.39 (November 2025), before settling at $16.74 on December 31, 2025 - continuing the same steady, volatile-but-directionally-positive climb documented in nu/2025-06 and nu/2025-09. With approximately 4.91 billion diluted weighted-average shares outstanding for the year:

Market cap → enterprise value	FY2025
Share price (period-end)	$16.74
Shares outstanding	~4.91B
Market capitalization	~$82.2B
Total liabilities	n/a (net cash basis, minimal net debt)
Less: cash and equivalents	n/a
Enterprise value	~$82.2B (approx., minimal net debt)

TTM net income (full fiscal year) is the FY2025 total of $2,871.7 million (or $2,868.9 million attributable to shareholders).

Peer-multiple sanity check	Q3 2025	FY2025	Change
Enterprise value / market cap	~$78.5B	~$82.2B	⚠️ up
P/E (trailing)	~31.0x	~28.6-28.7x	✅ down slightly

28-29x trailing earnings remains a large premium to Brazilian incumbents Itaú Unibanco and Banco Bradesco (typically 8-10x trailing), a gap that has held steady across all three quarters covered on this blog this year rather than widening or narrowing meaningfully - the market isn't re-rating Nu relative to incumbents quarter to quarter, just paying the same growth premium consistently.

Reverse DCF: at $82.2 billion and ~$2.87 billion FY2025 net income, using an 11-12% discount rate for Nu's Brazil/Mexico/Colombia currency and regulatory risk profile, the market is pricing in roughly 19-22% sustained annual earnings growth for 7-8 years before a terminal multiple of 12-15x. Nu delivered 45.6% net income growth this year - more than double what's priced in - which is either a genuinely mispriced compounder or a signal that growth this fast can't structurally continue for 7-8 more years (a large, mature loan book and a saturating home market make the second explanation the more statistically likely one over a long horizon, even if next year alone likely beats the priced-in rate again).

The reverse-DCF and peer-multiple lenses above are the more honest read here.

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