Nu Holdings Ltd. current report, Q1 FY2022

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.