Nubank shares up 10% as neobank reports record revenue in Q1

Nubank shares up 10% as neobank reports record revenue in Q1

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Shares of digital bank Nubank opened up 10% on May 16, following the release of its first-quarter results, which saw the Brazilian lender book record revenues on the back of strong customer growth.

The largest neobank in Latin America, a flagship for the regional fintech sector, nearly doubled its quarterly income. It reported $1.6 billion in revenue, up 87% from the year-ago period, as the company pivots to monetization while growing its client base.

Shares of Nubank were selling at $6.5 apiece at the beginning of the trading session, boosting its market value now over $30 billion. The digital bank has Warren Buffett’s Berkshire Hathaway among its investors and significant venture capital funds.

Nubank shares had gained momentum in the past few weeks, up 30.1% in the past month and climbing roughly 50% in the year. The stock performance, however, is still a bitter aftertaste for older investors, still down from its IPO price of $9 by the end of 2021.

Nubank makes way past breakeven

While Nubank has expanded to other regional markets, such as Colombia and Mexico, its home country continues to drive most of its business. The company said its Brazilian operation generated over 90% of its revenue.

“In Brazil, 46% of the adult population is a Nubank customer, a figure that doubled in only two years,” David Vélez, CEO and co-founder, said in a securities filing. “Our Brazil operation has consistently showcased the compounding effects of our business model,” the executive added.

For the digital lender, which boasts over 80 million customers in Latin America, these results mark the third quarter straight of net profits. The fintech appears to move past breakeven, with a $141.8 million profit in the three months compared to a $45.1 million loss in the year-ago quarter. It is also up from $59 million in the linked period.

Cross-selling opportunities among 80 million clients

David Velez headshotDavid Velez headshot
David Velez, CEO and co-founder at Nubank.

The company is looking to increase its average revenue per customer as it rolls out new products. One of the fintech’s main bets for the year is payroll lending in Brazil, which recently launched a pilot version called NuConsignado. New secured loan products — which bear less risk than unsecured credit — allow Nubank to generate revenue without necessarily taking on too much risk.

At $8.4, Brazil’s average earning per customer continues to operate well below traditional peers. However, according to the company, its service cost is much lower, currently at less than a dollar.

Nubank surpassed the 80 million customers threshold in Latin America, Velez said during the release of first-quarter results.

The new milestone marks a 33% growth yearly, up almost 20 million since the first quarter of 2022.

The digital bank started in 2013 in Brazil and branched out to Mexico and Colombia in the past few years. However, most of its clients are still based in Brazil, with over 75 million customers.

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  • David FelibaDavid Feliba

    David is a Latin American journalist. He reports regularly on the region for global news organizations such as The Washington Post, The New York Times, The Financial Times, and Americas Quarterly.

    He has worked for S&P Global Market Intelligence as a LatAm financial reporter and has built expertise on fintech and market trends in the region.

    He lives in Buenos Aires.

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