Shares of Nu Holdings (NYSE: NU) opened 13% higher on Friday. The Brazilian company behind the Nubank fintech brand reported Q2 results last night, crushing Wall Street estimates. This Rare Signal Is Flashing Again.
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Nu's IFRS revenues (the international equivalent of GAAP standards) rose 50% year-over-year to $5.51 billion.
Adjusted earnings jumped 66% to $0.22 per diluted share. The average analyst had expected earnings near $0.20 per share on revenue in the neighborhood of $5.39 billion. The company added 4 million customers during the quarter.
The global client count was 139 million, up from 122.7 million in the year-ago period. The Brazilian consumer market remained Nu's core business, but the customer count soared in Mexico (up 31.7%) and Colombia (up 55.9%). Crucially, Nu's payment volume rose 30.3% year over year, more than doubling the 13.3% customer growth.
The fintech is not only attracting many new customers, but existing ones are also using its services more often. Return on equity held steady at 33%, and the efficiency ratio came in at 19.5%. For context, most traditional banks operate with efficiency ratios in the 50%-60% range, and lower ratios are better.
Nu's digital-only model simply costs less to run. The numbers tell a familiar story for Nu watchers: more customers, deeper engagement, better margins. But the real headline came from Mexico, where regulators just handed Nu a full banking license.
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