What drove NU's gross profit growth in 2023?

Nu Holdings' gross profit grew significantly in 2023, primarily driven by operational efficiency and effective cost management. Here's a detailed analysis: 1. **Revenue Surge**: Nu's revenue grew substantially, rising from $8.03 billion in 2023Q4 to $11.52 billion in 2024Q4. This increase in revenue is a direct result of the company's expanding customer base and the growth in average revenue per active customer (ARPAC). 2. **Cost of Sales Management**: The cost of sales for Nu decreased from $4.54 billion in 2023Q4 to $6.26 billion in 2024Q4. This reduction in cost of sales, coupled with the increase in revenue, led to a higher gross profit margin. 3. **Gross Profit Margin Improvement**: The gross profit margin for Nu improved significantly, from 43.48% in 2023 to 34.7% in 2022. This indicates that for every dollar of revenue, Nu is able to keep a larger portion as gross profit. 4. **Operational Efficiency**: Nu's business model is characterized by a low-cost operating platform, with the monthly average cost to serve per active customer remaining below the dollar level at $0.8. This sustainable cost advantage allows Nu to scale its platform efficiently, leading to improved gross profit margins. 5. **Financial Discipline**: Nu's focus on financial discipline and effective capital management has resulted in a return on equity of 21% on net income and an impressive 25% on adjusted earnings. This financial prudence has contributed to the company's profitability and gross profit growth. In conclusion, Nu Holdings' gross profit growth in 2023 can be attributed to a combination of revenue surge, effective cost management, improved gross profit margin, operational efficiency, and financial discipline. These factors collectively contributed to the company's robust financial performance.