Nubank results point to Latin America’s fintech strength | WARC

Nubank results point to Latin America’s fintech strength

Brand growth
Digital payments
Strategy

Ten-year-old Brazilian fintech Nubank reported strong revenue, user and profit growth even in a difficult period, as Latin Americans expand the use of the company’s products.

Why it matters

Strong growth and a compelling product have contributed to the company’s profitability, and it seems to be enjoyed by users – now the question is where the next phase of growth will come from.

It is important to note that the company remained in a strong position as a provider of credit (moving into payments later), and is therefore targeting a more profitable market dominated by large established players amid a boom in the fintech sector, and a which may eventually be disrupted.

What’s up

After a tumultuous 2022, where the perception of fintech’s stability was in doubt, Nubank has been able to answer its critics despite difficult macro headwinds.

• User growth: 4.2 million added in Q4 (+38% year-on-year) to reach a total increase in 2022 of 20.7 million. Nubank now serves 74.6 million around the world.
• Q4 revenue increased 112% year-over-year to $1.5 billion.
• Gross profit grew 137% year over year to $578.3 million, with gross profit margins of 40%.
• Nubank’s customer base now represents 44% of the Brazilian population.

An inflection point

CEO and founder David Vélez noted the company’s currently low cost of customer acquisition, explaining to investors that 70 to 80% of customers come through word of mouth. As the company grows, it is likely that marketing costs will need to increase.

Looking at the financials, marketing costs actually increase by Q4 2023, up 43.6% year-over-year, or 48% year-over-year based on currency-neutral numbers.

However, it remains in a strong position in that it appears to have plenty of room to bring together services it had previously spun off while building its business, having increased deposits by 55% year-on-year and monthly average income per asset. customer by 37% compared to 2022.

“We are very proud that by the end of 2022, 58% of our active customers have chosen Nu as their primary bank account,” CFO Guilherme Lago explained on a call with analysts.

Key quote

“Despite the macroeconomic challenges in 2022, Nu was able to beat all key figures: maintained accelerated growth, gained share in products and markets,” CEO David Vélez said in a statement to Reuters.

Retrieved from Nubank, Seeking Alpha, Reuters, FT