How did NU's Q3 2024 earnings beat forecasts?

Nu Holdings Ltd. (NYSE: NU) reported Q3 2024 earnings that surpassed market forecasts, marking another quarter of robust performance for the digital banking giant. Here's a detailed analysis of NU's Q3 2024 earnings report:

1. Earnings Per Share (EPS) and Revenue: Nu reported an EPS of $0.11 for Q3 2024, reflecting a 22.22% increase year-over-year. This outperformed market expectations. Concurrently, the company's revenue for the quarter was estimated at $3.44 billion, indicating a 25.85% year-over-year growth. These figures surpassed consensus estimates, underscoring Nu's strong revenue growth trajectory.

2. Net Interest Income and Profitability: Nu's net interest income continued to soar, contributing significantly to the company's earnings outperformance. The company posted a 17.1% net profit margin for the year ending December 31, 2024, up from 12.8% the previous year. This substantial improvement in profitability reflects Nu's efficient management of its interest-bearing assets and liabilities.
3. Customer and Market Expansion: Nu's customer base grew to 114 million, with strong additions in Mexico and Colombia. The company's digital banking platform expanded its customer base by 22% year-over-year, reaching 102 million accounts in Brazil alone. This organic growth, coupled with strategic expansions, has bolstered Nu's revenue streams and market presence.
4. Average Revenue Per Active Customer (ARPAC): Nu's ARPAC increased by 23% year-over-year, reaching approximately $10.70 per customer. This indicates a strong monetization strategy and customer engagement, which has been a key driver of revenue growth.
5. Market Outperformance and Institutional Confidence: Despite market volatility, Nu's stock outperformed the S&P 500 in several trading sessions. Institutional investors, though adjusting their stakes, still maintain a significant ownership in Nu Holdings, reflecting confidence in the company's long-term potential.

In conclusion, Nu Holdings' Q3 2024 earnings exceeded forecasts due to robust growth in net interest income, a surge in revenue, effective customer acquisition, and an increase in average revenue per active customer. These factors, coupled with market outperformance and institutional confidence, underscore Nu's strong financial performance and growth prospects.