Nu Holdings Ltd. - Q4 and Full Year 2022 Financial Summary
Business Context and Reporting Period
This Form 6-K filing, dated February 14, 2023, reports the Fourth Quarter (Q4) and Full Year (FY) 2022 financial results for Nu Holdings Ltd. (NYSE: NU). Nu is a leading digital financial services platform operating primarily in Brazil, Mexico, and Colombia. The results are presented in U.S. dollars in accordance with International Financial Reporting Standards (IFRS).
Key Financial Metrics
| Metric | Q4 2022 | FY 2022 |
|---|---|---|
| Revenue | $1.45 billion | $4.8 billion |
| Gross Profit | $578.3 million | $1.66 billion |
| Gross Margin | 40% | 35% |
| Net Income (GAAP) | $58 million | Not explicitly stated for FY |
| Adjusted Net Income | $133 million | Not explicitly stated for FY |
| Net Income (Brazil Only) | $138 million | $185 million |
| Adjusted Capital | $3.8 billion | N/A |
| Total Deposits | $15.8 billion | N/A |
| Loan-to-Deposit Ratio | 25% | N/A |
| Efficiency Ratio | 47.4% | N/A |
Operational Metrics: Total customers reached 74.6 million (38% YoY growth). Monthly Average Revenue Per Active Customer (ARPAC) was $8.2 (37% YoY FX neutral growth). Activity rate reached 82%.
Material Changes vs. Prior Period
- Profitability: The company reported its second consecutive quarter of GAAP profit ($58 million), excluding a one-time non-cash charge of $355.6 million related to the termination of a CSA agreement. Brazil's Net Income surged to $138 million in Q4, up from a $20 million loss in 2021.
- Revenue Growth: FY 2022 revenue hit a record $4.8 billion, representing a 168% annual expansion on a foreign exchange neutral (FXN) basis.
- Asset Quality: The 15-90 day Non-Performing Loan (NPL) ratio improved by 50 basis points to 3.7% in Q4, while the 90+ day NPL ratio stood at 5.2%.
- Customer Base: Added 4.2 million customers in Q4 and 20.7 million in 2022. Brazil accounts for 93% of total revenue.
Guidance, Outlook, and Risks
Management Commentary: CEO David Vélez highlighted record results with growth across all metrics, noting that Nu beat every key metric despite macroeconomic challenges. The company emphasized its position as Brazil's fifth-largest financial institution by active customers and its high annualized Return on Equity (ROE) of 35% in Brazil.
Outlook: Management expects continued expansion of the ecosystem and further client engagement. International growth remains strong, with Mexico's customer base growing 129% and Colombia showing strong relative growth.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Risks include macroeconomic volatility, credit underwriting performance, and the accuracy of third-party market data. The company notes that actual results may differ materially from forecasts due to various uncertainties.
Investor Verification Checklist
- Verify the reconciliation of the $355.6 million one-time non-cash CSA termination charge to understand its full impact on GAAP vs. Adjusted metrics.
- Confirm the sustainability of the 35% annualized ROE in Brazil given the high interest rate environment.
- Review the detailed breakdown of the 15-90 day NPL ratio improvement to assess credit underwriting stability.
- Validate the 168% revenue growth rate on an FX-neutral basis to isolate organic growth from currency fluctuations.
- Assess the scalability of the 47.4% efficiency ratio as the company continues to expand into Mexico and Colombia.