O Nubank (Nu Holdings) released its financial results for the third quarter of 2022 with the words “growing strong and profitable”. And it’s true. If on previous occasions the company highlighted only the “adjusted profit”, this time, the report shows a volume of US$ 7.8 million as “true” profit.
Revenue for the period was US$ 1.3 billion (R$ 6.9 billion, in direct conversion). This is a record for Nubank. In the third quarter of 2021, this parameter stood at $480.9 million. There was growth of 172% in the year-on-year comparison, therefore.
Faced with revenues of US$ 1.3 billion, a net profit of US$ 7.8 million (R$ 42 million) seems an insignificant number. But the value points to a progressive improvement in the company’s operational strategy.
Just make a year-to-year comparison again. In the third quarter of 2021, Nubank recorded a loss of US$ 34.4 million.
Let’s also take into account that, in the quarters following this one, Nubank highlighted only the adjusted net income. This parameter is formed based on the exclusion of factors such as expenses related to share compensation and tax effects.
In the financial report for the first quarter of 2022, for example, Nubank’s adjusted profit was US$ 10.1 million, but there was no net profit. In fact, the company ended the period with a net loss of US$ 45.1 million.
The most recent results show that the adjusted profit was US$ 63.1 million. But there was no damage. As we already know, net income closed at US$ 7.8 million.
70 million customers and low costs
O Nubank credits third quarter results to three main factors: “more customers, greater engagement and low operating costs”.
Adding up the markets in which it operates — Brazil, Colombia and Mexico —, the company surpassed the mark of 70 million customers in the period.
Nubank has a measure that assesses the average monthly revenue per active customer. Another measure indicates the average monthly cost of serving each active customer. The first parameter stood at $7.9. The second, at $0.8.
The company itself explains what this means: “on average, each active customer is bringing us more revenue, while our cost to serve them remains the same”.
In the report, Nubank also highlighted that its service costs are 85% lower compared to traditional banks.
But defaults rose
Despite the positive numbers, the last quarter was not favorable to Nubank in all aspects. The company saw defaults among customers rise in the period.
Delinquency of 15 to 90 days increased to 4.2%. In the previous quarter, this parameter was at 3.7%. Bad debt for periods longer than 90 days increased from 4.1% (previous quarter) to 4.7%.
The increase in the problem was noticed both in operations with credit cards and loans (personal credit).
However, Nubank claims that this scenario is the result of a macro trend, that is, a situation that affects the entire market. The company also points out that its performance continues to be better than that of other institutions.
Looking to Colombia and Mexico
Of the 70 million customers reached by Nubank in the third quarter of 2022, 66.9 million are in Brazil. But that doesn’t put the company off on the international expansion aspect.
To comment on the financial results, David Vélez, CEO of Nubank, spoke of accelerating the growth of the company’s customer bases in Colombia and Mexico. The executive understands that, together, these markets could be bigger than the company’s operations in Brazil.
This hypothesis is based on the perception that Nubank follows a stronger growth pace in these countries compared to Brazil. To increase that pace, the company bought a small bank in Mexico and is awaiting a banking license to launch the Nu account in Colombia.
Arriving in other countries? Perhaps at another time. For 2023, Nubank plans to focus precisely on Colombia and Mexico.