NU Nu Says Revenue Crossed $5 Billion. Its Own Filed Statements Say $347 Million Less.

Three Countries, One Earnings-Generating Formula, Now Running Twice

Nu Holdings' first quarter of 2026 (period ended March 31, 2026) is the first quarter since nu/2022-03 covered here, and the business has changed scale almost beyond recognition in the four years between: back then it was a 59.6 million-customer, still-loss-adjacent Brazilian credit-card issuer proving it could turn a profit at all. Now it's a 135.2 million-customer, three-country bank posting $871.4 million of quarterly net income, a 29% return on equity, and - for the first time - a genuinely profitable Mexican operation. Founder and CEO David Vélez's framing for the quarter leans hard into "AI transformation": a proprietary foundation-model stack ("NuFormer") now underwriting Brazilian and Mexican credit card decisions and Brazilian unsecured lending in real time, and an "AI Private Banker" serving more than 15 million monthly active users. That's a genuine capability claim, and the balance sheet backs part of it - internally developed intangible assets (largely capitalized software) jumped $83.8 million in just this one quarter, the fastest quarterly build in that line item available in this filing (see Beyond the Usual).

The more interesting story for a reader following the numbers, though, is what's happening one level below the AI narrative: Mexico's "same earnings-generating formula that built Brazil" - grow the customer base fast, monetize it steadily through ARPAC^» expansion, keep cost-to-serve flat - has now visibly worked a second time. Nu crossed 15 million Mexican customers this quarter (roughly a sevenfold increase in four years, per management) and, on Nu's own accounting, broke even there for the first time. If that holds, it's real evidence the Brazilian playbook travels, not a one-market fluke - the single most important forward-looking data point in this release, more important than the AI framing built around it.

The Prescription

Nu should keep doing exactly what got Mexico to break-even: expand ARPAC and hold cost-to-serve flat before chasing net-new customer volume in a market. The efficiency ratio^» improved to 17.6% this quarter precisely because ARPAC growth (+23% FXN YoY, to ~$15.90) outran cost growth, the same sequencing that took years to compound in Brazil and now appears to be repeating faster in Mexico. Colombia, still pre-break-even and approaching 5 million customers, is the next test of whether this is a repeatable formula or a Brazil-and-Mexico-specific one - Nu's own framing already treats it as proven, which is one step ahead of what the numbers currently show.

What Nu should stop doing: leading its own headline metrics with a non-IFRS "Managerial P&L" that reports $347.5 million more revenue than the audited IFRS statements filed the same day (see Beyond the Usual below). The reclassification is disclosed and reconciled, so this isn't concealment - but a company five months into using a self-defined revenue measure that's consistently larger than its GAAP-equivalent number should be leading with the audited figure and treating the managerial view as the supplement, not the reverse. The credibility Nu has built through three straight years of real profitability doesn't need a friendlier ruler.

Key Financial Metrics

Q1 2026 vs. Q1 2025, consolidated IFRS figures, reported in USD - Nu reports natively in US dollars, so no FX conversion is needed

Metric	Q1 2026	Q1 2025	YoY
Total revenue (IFRS)	$4,968.0M	$3,247.7M	✅ +53.0%
Net interest income and gains, net of losses	$4,275.3M	$2,732.1M	✅ +56.5%
Gross profit	$1,864.9M	$1,319.5M	✅ +41.3% (margin 37.5% vs. 40.6% - see note below)
Total operating expenses (net of other income)	$909.5M	$523.3M	⚠️ +73.8%, outpacing revenue
Income before income taxes	$954.3M	$795.1M	✅ +20.0%
Income tax expense	$82.9M	$237.9M	✅ Effective rate fell to 8.7% from 29.9% (see note below)
Net income for the period	$871.4M	$557.2M	✅ +56.4% (management's own FXN framing: +41%)
Net cash from (used in) operating activities	$(1,213.9)M	$1,085.3M	⚠️ Swung negative - see note below
Total cash and cash equivalents (quarter-end)	$13,920.4M	$10,284.0M	✅ +35.4%

Balance sheet metric	Mar 2026	Dec 2025	Change
Total assets	$77,456.4M	$74,893.9M	✅ +3.4%
Total liabilities	$64,864.6M	$63,572.3M	⚠️ +2.0%
Total equity	$12,591.8M	$11,321.6M	✅ +11.2%
Deposits	$42,448.1M	$41,925.1M	✅ +1.2%
Credit card receivables + loans to customers (net)	$31,156.0M	$27,689.4M	✅ +12.5%

Gross margin compressed to 37.5% from 40.6% a year earlier, on rising expected credit loss^»: expected credit loss expense grew 76.5% YoY (to $1,718.0 million) versus 53.0% revenue growth, consistent with Nu's own disclosure that the 15-90 NPL^» ratio rose 89 basis points sequentially - which the company frames, plausibly, as its usual first-quarter delinquency seasonality (see Key Operational Metrics) rather than a credit-quality break. The effective tax rate's swing from 29.9% to 8.7% is not a one-off aggressive maneuver - the filed reconciliation shows it's driven mainly by a $319.8 million deferred tax benefit as growing credit-loss provisions create new deductible temporary differences (a mechanical consequence of the credit book expanding 40% YoY, not a discretionary tax choice), partly offset by a new $12.8 million charge tied to Brazil's Complementary Law 224/2025 raising future CSLL tax rates on payment and credit institutions. Both are disclosed in the filed notes, but the size of the swing is large enough that a reader shouldn't take this quarter's low tax rate as the new steady state.

Operating cash flow swung from generating $1,085.3 million a year ago to consuming $1,213.9 million this quarter - the mirror image of nu/2022-03's favorable mix, this time unfavorable: credit card receivables ($4,241.1 million outflow) and loans to customers ($3,774.6 million outflow) grew faster than deposits could fund them ($515.5 million inflow) and payables to network only partially offset the gap ($758.2 million inflow). This is normal for a lender growing its book 40% YoY faster than deposits (7% QoQ credit growth vs. -4% FXN QoQ deposits, per the Loan-to-Deposit Ratio^» rising to 58.3% from 49.1% last quarter) - not a liquidity problem given $13.9 billion of cash on hand, but a trend worth watching if it continues for several more quarters without deposit growth catching up.

Key Operational Metrics

• Customers: 135.2 million (Mar 2026) vs. 118.6 million (Mar 2025) - ✅ +14% YoY FXN, +4 million net adds this quarter alone. Brazil surpassed 115 million customers (largest private financial institution in the country); Mexico surpassed 15 million (third-largest financial institution in that market); Colombia is approaching 5 million.
• Monthly activity rate: 83.4%, flat sequentially despite typical Q1 seasonality, and expanding in Brazil specifically as it approaches 100 million active customers.
• ARPAC: approximately $15.90, up 23% FXN YoY and up again sequentially from $15.00 in Q4'25 - continuing the multi-year monetization trend management first pointed to (as ARPAM) back in nu/2022-03, now roughly 2.4x that quarter's $6.7 figure.
• Efficiency ratio^»: 17.6%, improved from 19.9% in Q4'25 and 21.4% a year ago - management expects the full-year ratio to land close to where 2025 ended as U.S. expansion and return-to-office costs scale back up through the year.
• Total credit portfolio: $37.2 billion (credit cards $24.3 billion, unsecured lending nearly $10 billion, secured lending $3 billion), +40% YoY FXN and +7% QoQ.
• Risk-Adjusted NIM^»: 9.5%, down 100 basis points sequentially from 10.5% in Q4'25, as the credit-loss allowance build (+33% QoQ) outpaced NIM expansion (to 21.1% headline).
• Geographic segment note: still a single reportable operating segment (the CEO, as Chief Operating Decision Maker, reviews the Group on a combined basis) - unchanged since nu/2022-03. The one annual/interim geographic disclosure Nu does provide shows Brazil revenue of $3,586.6 million (+53.3% YoY) against Mexico's $289.0 million (+96.4% YoY) and "Other countries" (mainly Colombia) at $76.7 million - Mexico and Colombia combined are still under 10% of this disclosed revenue base, so the break-even milestone in Mexico is a genuine inflection but not yet a material share of consolidated economics. Note this geographic table (note 34) uses a narrower revenue definition (interest, card, and fee income only) than the $4,968.0 million headline IFRS total revenue figure above, so the two aren't directly comparable line-for-line.
• US expansion: management describes a "measured, capital-efficient" entry, capping total investment below 100 basis points of the consolidated efficiency ratio in both 2026 and 2027 - contained inside the ~20% efficiency-ratio range already guided for the year, with further investment contingent on demonstrated product-market fit.

Beyond the Usual

A new non-IFRS "Managerial P&L" adds $347.5 million to headline revenue

Starting Q4 2025, Nu began presenting a "Managerial P&L" - a reclassification of IFRS line items management says better reflects value creation across an increasingly multi-country, multi-product business. For Q1 2026, this framework reports Total Revenue of $5,315.5 million, Gross Profit of $1,877.7 million, and Net Income of $871.4 million - versus the audited IFRS statements' $4,968.0 million revenue, $1,864.9 million gross profit, and the same $871.4 million net income. The $347.5 million revenue gap comes mostly from reclassifying $266.7 million of "float income" and $66.5 million of "fee income" that IFRS reports elsewhere in the statements, plus $217.9 million of "revenue-based taxes" that IFRS nets directly against revenue but the Managerial P&L instead shows as a separate cost line below a higher revenue figure. Net income is identical either way - this is a presentation choice about where costs sit in the P&L, not a change to the bottom line - but it means every "revenue" and "gross profit" figure Nu now leads with in its own press release is measured on a ruler its own audited financial statements don't use. The framework is disclosed and reconciled (Nu published a separate reconciliation report), so this isn't concealment, but it's worth tracking every future quarter against the IFRS figures independently rather than taking the managerial numbers at face value.

Internally developed intangible assets jumped 15.6% in a single quarter

Net internally developed intangible assets (mostly capitalized software) rose from $492.0 million to $568.4 million in the three months ended March 31, 2026 - $83.8 million of gross additions against only $22.6 million of amortization. That's a real capital-allocation signal behind the AI-transformation narrative in the opening pages of the press release: Nu is capitalizing a meaningfully larger share of its technology spend than in prior periods, rather than simply talking about AI investment.

The parent-level guarantee structure from four years ago is gone

Back in Q1 2022 (nu/2022-03), Nu Holdings and Nu Pagamentos were guarantors on up to $135 million of Nu Servicios' (Mexico) bank borrowings from Bank of America, JPMorgan, and Goldman Sachs - a contingent parent-level exposure that didn't show up in headline consolidated debt. This quarter's notes state plainly that "Nu Holdings is not guarantor to any of the borrowings and financing arrangements" on the balance sheet, which now consist of $2.6 billion of CDI-indexed financial bills issued by Nu Financeira and a $1.9 billion SOFR-indexed margin loan facility collateralized by government securities and sovereign bonds - a cleaner, asset-backed funding structure than the cross-border parent guarantees Nu relied on earlier in its international expansion.

RSU grant values have roughly doubled since the last quarter covered here

Nu granted 27.3 million new RSUs this quarter at a weighted-average grant-date fair value of $15.14 - up from $10.83 a year earlier, and more than double the $6.7-$8 range implied around the nu/2022-03 period. Total RSUs and SOPs outstanding at quarter-end (roughly 92.2 million combined) represent a meaningful, growing future dilution and expense base as the stock price has appreciated - total share-based compensation expense of $82.4 million this quarter is little changed in dollar terms from $77.7 million four years ago, but that stability masks a much larger share count and grant-date value working through the system now.

Judicial deposits still carry a pre-acquisition tax dispute

Of the $7.7 million in judicial deposits Nu discloses under "Other assets," a substantial portion is still tied to a withholding-tax proceeding against the former shareholders of Nu Investimentos, predating that company's acquisition by Nu years ago - a small, long-tail legacy liability still being carried and disclosed quarter after quarter rather than resolved.

Target Valuation Range

No numeric fair-value range is computable this quarter: a multi-year DCF isn't supportable yet (operating cash flow swung negative on balance-sheet mechanics this quarter, and no verified trailing-twelve-month figure exists across all of 2025), so this section relies on ROE (29%) comfortably clearing an estimated 13-15% cost of equity alongside a ~20x P/E and ~5.6x P/B - a "fairly valued to modestly rich" qualitative read rather than a computed target, with the stock already re-rated up from a sub-$11 low twelve months ago.

Nu closed Q1 2026 at $14.37 (March 31, 2026) - up from a trailing-twelve-month low of $10.24 (March 2025) but down from a $17.75 high just two months earlier (January 2026), a meaningful round trip worth noting for a reader checking the current price against this filing: roughly +73% peak-to-trough-to-peak over the two-year window before pulling back 19% into quarter-end, a swing large enough to matter for anyone using a recent price as an anchor. With 4,861,741,251 total shares outstanding (Class A and B combined, no stock split has occurred since the pre-IPO 6-for-1 split already reflected in nu/2022-03's share count):

Market cap → enterprise value	Q1 2026
Share price (period-end)	$14.37
Shares outstanding	4,861,741,251
Market capitalization	~$69.9B
Total liabilities (interest-bearing borrowings, financing, leases)	~$4.6B
Less: cash and equivalents	~$13.9B
Enterprise value	~$60.5B

Peer-multiple sanity check	FY2025	Q1 2026	Change
Enterprise value / market cap	~$82.2B	~$69.9B (mkt cap) / ~$60.5B (EV)	✅ down
EV/Revenue	n/a	~3.0x (annualized proxy, not verified TTM)	-
P/E	~28.6-28.7x	~20x (annualized proxy, not verified TTM)	✅ down
P/B	n/a	~5.6x	✅ down vs. ~7.5x in nu/2022-03
ROE vs. cost of equity	n/a	29% ROE vs. ~13-15% estimated cost of equity	- genuine value creation

Note: this quarter's P/E and EV/Revenue use this quarter's IFRS figures annualized (×4) as a rough proxy in the absence of a verified trailing-twelve-month figure across all of 2025's quarters. Q4 2025's disclosed net income ($894.8 million) was close to this quarter's, so the annualized figure isn't likely far off a real trailing-twelve-month number, but it isn't a substitute for one. Nu's disclosed 29% ROE comfortably clears a reasonable cost-of-equity estimate for a Brazil-exposed financial (roughly 13-15%, combining a mid-single-digit risk-free rate, a fintech-appropriate beta above 1, a mid-single-digit equity risk premium, and a Brazil country-risk premium) - genuine value creation, not a levered ROE propped up by low equity. This is the strongest single number in the valuation case: the business is earning well above its cost of capital, and by a wide enough margin that a premium multiple is defensible in principle.

A full multi-year DCF still isn't the right tool here: a five-year unlevered free-cash-flow projection would need to model deposit growth, credit-portfolio growth, and provisioning together in a way this quarter's numbers alone don't support, and this quarter's own operating cash flow swung meaningfully negative on balance-sheet growth mechanics (see Key Financial Metrics) - not the kind of stable base a DCF should be built on without several more quarters of trend. The ROE-vs-cost-of-equity read above, together with the P/E and P/B multiples, is the more honest tool for a bank at this stage: on that basis, Nu looks like a business earning real economic profit, priced at a multiple that reflects real but not extreme optimism about that continuing - closer to fair than to obviously cheap or obviously expensive, with the managerial-P&L framing (see Beyond the Usual) being the one thing that could make the headline growth numbers look better than the audited ones actually are.

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