Nu Holdings Ltd. Q1 2022 Financial Summary
Business Context and Reporting Period
This Form 6-K filing presents the unaudited interim condensed consolidated financial statements for Nu Holdings Ltd. for the three-month period ended March 31, 2022. Nu is a digital financial services provider operating primarily in Brazil, with expanding operations in Mexico and Colombia. The company operates as a single reportable segment. The financial statements were prepared in accordance with IFRS and reviewed by KPMG Auditores Independentes Ltda.
Key Financial Metrics
| Metric (in thousands USD) | Q1 2022 | Q1 2021 |
|---|---|---|
| Total Revenue | 877,267 | 245,063 |
| Gross Profit | 294,094 | 115,677 |
| Loss Before Income Taxes | (67,651) | (53,367) |
| Net Loss | (45,004) | (49,483) |
| Loss Per Share (Basic & Diluted) | (0.0097) | (0.0367) |
| Cash and Cash Equivalents (End of Period) | 2,968,622 | 2,200,663 |
| Total Assets | 24,258,003 | 19,858,681 (Dec 31, 2021) |
| Total Liabilities | 19,467,421 | 15,416,140 (Dec 31, 2021) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased by 258% year-over-year, driven by a 386% increase in interest income and gains on financial instruments and a 119% increase in fee and commission income.
- Expense Expansion: Total operating expenses rose to $361.7 million from $169.0 million in Q1 2021. This includes a significant increase in General and Administrative expenses ($245.1M vs $115.8M) and Marketing expenses ($27.6M vs $4.9M), reflecting continued investment in growth and infrastructure.
- Credit Losses: Credit loss allowance expenses increased to $275.7 million from $71.3 million. Management noted a normalization of portfolio risk to pre-pandemic levels and the removal of the COVID-19 post-model adjustment as of March 31, 2022.
- Balance Sheet Growth: Credit card receivables grew to $6.23 billion (up from $4.78 billion at year-end 2021), and loans to customers increased to $1.67 billion (up from $1.19 billion). Customer deposits grew to $12.6 billion.
- Acquisition: The company completed the acquisition of Olivia AI in January 2022 for a total consideration of $47.2 million, contributing $280,000 in revenue and a $9.1 million loss for the period.
Outlook, Risks, and Unusual Items
- Capital Management: The Financial Conglomerate in Brazil maintained a Basel Ratio of 18.1% (minimum required 14.0%), and Nu Pagamentos maintained a capital requirement ratio of 20.7% (minimum 2%).
- Subsequent Event: On April 11, 2022, the Group secured a $650 million syndicated credit facility with a 3-year maturity to support operations in Colombia and Mexico.
- Risk Factors: The filing highlights active monitoring of credit risk, liquidity risk, market risk (including interest rate and FX exposure), and operational/IT risks. The company utilizes a three-line defense model for risk management.
- Unusual Items: The net loss was partially offset by a significant deferred tax benefit of $121.7 million. Other comprehensive income included a $63.5 million gain from currency translation on foreign entities.
Investor Verification Checklist
- Credit Quality Trends: Verify the trajectory of the credit loss allowance as the portfolio normalizes to pre-pandemic risk levels and the post-model adjustment is removed.
- Expense Run Rate: Assess the sustainability of the rapid increase in operating expenses (particularly G&A and Marketing) relative to revenue growth and path to profitability.
- Liquidity and Funding: Confirm the utilization of the new $650 million syndicated facility and the stability of customer deposit growth as a primary funding source.
- Acquisition Integration: Monitor the integration and performance contribution of the Olivia AI acquisition.
- Regulatory Capital: Track compliance with Basel ratios in Brazil and NICAP metrics in Mexico as the loan book expands.