Nu Holdings' Second-Quarter Earnings Report Tomorrow Could Send the Stock Soaring. Here's Why.

Brazil-based digital banking platform Nu Holdings (NYSE:NU) reports its second-quarter earnings tomorrow after the market closes. While investors will closely watch for revenue and earnings beats, a few catalysts could truly send the stock soaring.

Serving Latin America, across Brazil, Mexico, and Colombia, the company has over 135 million customers with no signs of a slowdown in growth. Nu added 17 million customers in 2025 and has continued in a similar vein this year, gaining another four million customers in the first quarter.

Yet these numbers don’t necessarily impress markets. It’s the catalysts behind these growth numbers that hold the clue to how the stock will respond.

Here are three major catalysts that could send the stock soaring on Friday and beyond.

Image source: The Motley Fool.

1. Mexico en route to becoming the next Brazil

Of the 135 million customers, more than 115 million are from Brazil. Mexico operations, on the other hand, are growing. Crossing 15 million customers in the first quarter, Nu became Mexico’s third-largest financial institution and is also the country’s fastest-growing credit card issuer. Importantly, Nu’s Mexican customer base has grown nearly seven times over the past four years.

If management gives any indication that Mexico is scaling faster than Brazil, the market will discount this into Nu Holding’s valuation. However, investors should closely monitor increases in deposits and loan disbursements.

At the end of the day, a bank’s business is essentially a spread business. It takes in low-cost deposits and lends them out to high-quality, credit-worthy borrowers at higher interest rates.

Additionally, Colombia, with five million customers, is also scaling up. While growth here may not necessarily move the overall needle much, investors may eventually see this market’s long-term value.

Yet, growth for growth’s sake won’t impress the stock market. As a large-scale lender, Nu’s credit expansion must be accompanied by profit growth. And that leads us to our next catalyst.

2. Better than expected credit quality

The market’s greatest worry has been that Nu Holding’s rapid lending growth could result in higher losses. It isn’t surprising that the stock is down 20% this year. In the first quarter, the credit loss allowance rose 33% from the fourth quarter of 2025 to $1.79 billion, partly driven by portfolio growth.

The company’s primary credit quality indicator, its 15- to 90-day loan portfolio’s non-performing loan (NPL) ratio, was up 89 basis points (bps) from the previous quarter. Management attributed the worsening performance to seasonality, but the market seems wary. The good news is the 90+ NPL ratio declined 10 bps, to 6.5%.

While Q1 net profit grew 56% year-over-year, it came in slightly below the previous quarter’s bottom line. Assuming management’s “seasonality” argument is correct, if the second-quarter 15-90 NPL ratio falls more than expected while 90+ NPL remains stable, expect a solid boost in the stock price.

Simultaneously, investors will be watching for improvements in Nu’s net interest margin (NIM), which, on a risk-adjusted basis, should exceed the 9.5% it reported in Q1. In layman’s terms, net interest margin indicates the difference between a lender’s interest income and interest expense as a ratio of its average earning assets for the quarter. The higher the margin, the more profitable the lender.

The stock market will essentially read the two signals as those of a lending business that can grow without being burned by credit losses.

3. Growing average revenue per customer

This is probably not a highly appreciated metric. But investors evaluating Nu Holdings’ long-term prospects will want to assess the digital bank’s trajectory by its monthly average revenue per active customer (ARPAC).

A growing ARPAC is insurance against slowing or even decreasing volume growth. Nu Holding doesn’t necessarily have to acquire large volumes of customers. Instead, it’s increasingly focused on increasing average revenue per customer.

For example, around 62% of Brazil’s adults already use its services, meaning that future volume-driven growth will inevitably slow in Nu’s primary market.

The company has meaningfully increased its ARPAC from $11.6 per customer in Q1 2025 to $15.9 per customer in Q1 2026, a 37% year-on-year increase. As a result, it successfully reduced its efficiency ratio from 21.4% to 17.6% over the same period.

Can Nu Holding continue this trend? That remains to be seen, but there are solid indications that management is putting serious work into reducing its operating leverage.

A multi-expansion story

Nu Holdings is a multi-expansion story that has the ability to pull multiple levers for growth. However, these catalysts should work in tandem, given the macroeconomic uncertainty.

In addition, a surprise announcement about definite development in its U.S. expansion plans could drive the stock higher. Earlier this year, Nu Holdings received conditional approval from U.S. regulators for a national bank charter.

While beating the consensus EPS estimate of $0.19 will be important tomorrow, look for unexpected gains in these catalysts to drive the stock higher.

Isac Simon has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nu Holdings. The Motley Fool has a disclosure policy.