Nu Q1 Earnings: Expansion Takes a Toll

Here's our initial take on Nu Holdings' (NYSE: NU) fiscal 2025 first-quarter financial report.

Key Metrics

Customer and Deposit Growth

Nu Holdings grew revenue by 19% year over year in the first quarter, or by 40% when adjusted for currency exchange. The Brazilian digital banking provider ended the first quarter with 118.6 million customers and 98.7 million active customers, with both metrics up 19% year over year.

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Total deposits of $31.6 billion rose by 48% when adjusted for currency, while the interest-earning portfolio expanded by 62% to $13.8 billion. Nu's risk-adjusted net interest margin dipped to 8.2%, with the decline driven by higher credit loss allowances and the company's expansion into Mexico and Colombia.

Adjusted net income jumped by 37% to $606.5 million, with adjusted earnings per share slightly missing analyst expectations. The monthly average revenue per active customer was down slightly to $11.20, although this metric rose by 17% when adjusted for currency. Purchase volumes dropped by 2% year over year and rose by 16% when adjusted for currency.

Immediate Market Reaction

Shares of Nu Holdings were down around 6% in after-hours trading soon after the first-quarter report was released on Tuesday. While the company beat analyst expectations for revenue, adjusted earnings per share came up short, and currency swings negatively impacted many of Nu's key metrics. The stock has been volatile this year, and Tuesday's results likely won't change the situation.

What to Watch

Nu is expanding outside its home base of Brazil, but that process is creating some headwinds. The company noted that its risk-adjusted net interest margin came under some pressure in the first quarter due to its "conscious decisions about deposit pricing in new geographies and the strategic pace of its asset growth there."

While Nu's results were solid overall in the first quarter, investors should look to the earnings call, held Tuesday evening, for more details on the company's international expansion efforts.

Helpful Resources

• Full earnings report
• Investor relations page

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.