Nu Holdings 2025 Q1 Earnings Misses Targets as Net Income Grows 47.1%

Nu Holdings (NU) reported its fiscal 2025 Q1 earnings on May 13th, 2025. The company saw a 47.1% increase in net income, reaching $557.21 million, while earnings per share rose to $0.12. Despite these gains, Nu Holdings missed revenue expectations, reporting $3.25 billion against a forecast of $3.49 billion. The company has set robust guidance for Q2, aiming for $3.49 billion in revenue with an EPS target of $0.13. Nu plans to continue its strong customer acquisition strategy, projecting an increase of over 5 million active customers quarter-over-quarter.

Revenue

Nu Holdings experienced an 18.7% increase in total revenue for Q1 2025, reaching $3.25 billion compared to $2.74 billion in the same quarter of the previous year. The revenue segments included interest income and gains or losses on financial instruments at $2.73 billion, and fee and commission income contributing $515.55 million. This growth showcases the company's ability to expand its financial services offerings and capture more market share.

Earnings/Net Income

Nu Holdings reported a 45.7% increase in EPS to $0.12 for Q1 2025, up from $0.08 in Q1 2024, with net income growing to $557.21 million. This marks the highest fiscal Q1 net income in six years, highlighting the company's improved profitability. Despite missing EPS consensus estimates, the significant growth in net income illustrates strong financial performance.

Post-Earnings Price Action Review

Nu Holdings has demonstrated a compelling post-earnings trading strategy over the past five years, significantly outperforming the benchmark. By purchasing shares following a quarterly revenue decline and holding them for 30 days, investors achieved a remarkable 1047.38% return. This strategy delivered an impressive excess return of 959.42% over the market, underscoring its effectiveness. The compound annual growth rate reached 63.42%, highlighting its strong compounding potential. However, the strategy's Sharpe ratio of 1.17 and a maximum drawdown of -67.13% reveal the inherent risks and volatility. While high returns were achieved, investors should be aware of the considerable risk associated with this approach.

CEO Commentary

David Vélez, CEO of Nu Holdings, expressed confidence in the company's growth trajectory, highlighting that Nubank reached 118.6 million customers, with a significant addition of over 4 million in a single quarter. He noted that this growth stems from deepening customer engagement, evidenced by a monthly activity rate exceeding 83%. Vélez acknowledged challenges such as net interest margin compression but emphasized the company's disciplined approach to expanding in Brazil, Mexico, and Colombia. He conveyed optimism about the future, stating, “We are confident that by continuously enhancing our offerings, Nubank will capitalize on the long runway of growth ahead of us and deliver enduring value to both customers and shareholders.”

Guidance

Nu Holdings provided guidance indicating expectations for continued robust growth, aiming for revenue of approximately $3.49 billion in Q2 2025, alongside an EPS target of $0.13. The company plans to maintain its strong customer acquisition momentum, projecting an increase in active customers by more than 5 million quarter-over-quarter. Management also highlighted ongoing investments in expanding payroll-deducted lending in Brazil and enhancing monetization strategies in Mexico and Colombia, signaling a focus on sustainable growth and market positioning.

Additional News

In recent developments, Nu Holdings has secured regulatory approval to transform its Mexico banking operations into a full-service bank. This strategic move allows the company to offer a wider array of products and potentially increase its market share in Mexico. Additionally, the company is making strides in Brazil's public payroll loan market, launching its first two collateral types with plans for further expansion. This sector presents a lucrative opportunity for Nu Holdings, offering low-risk lending potential. Moreover, the absence of significant insider trading activity suggests strong confidence in the company's growth prospects and financial strategy.