In This Article:
Key Points
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Nu is reporting high growth and increasing profitability as it adds new members and cross sells new products.
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It sees huge opportunities in Mexico, Latin America's second-largest banking market, where it was just approved for a bank charter.
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Nu stock looks cheap, but it may not be for the risk-averse investor.
Nu Holdings (NYSE: NU) continues to crush the market, up almost 30% this year while the S&P 500 is little changed. It reported inspiring results for the 2025 first quarter, and because it's not a U.S. company, investors may see it as a safer stock while tariff discussions are still in the works. That's a turnaround from previous market sentiment, which viewed its international status as a risk factor.
There are a lot of exciting things going on at this Brazil-based online bank, and if you have $1,000 available to invest after paying off debt and saving for an emergency fund, Nu stock is an excellent candidate.
Disrupting global banking
Nu was created as a reaction to the stringent barriers to entry in the Brazilian banking market, which is dominated by a handful of large, legacy banks. It offers all-digital financial services, and now that it has created a strong brand presence, it has launched new products to target other strata of society, and it's rolling out in new markets.
It's in high-growth mode. Revenue rose 40% year over year (currency neutral) to $3.1 billion in the 2025 first quarter, and net income increased 74% to $557.2 million. The strong performance was driven by new members and the increasing cross-selling of new products. It added 4.3 million customers for a total of $118.6 million, a 19% increase year over year. The credit business also has high momentum. Deposits increased 48% to $31.6 billion, and the interest-earning portfolio was up 62% to $13.8 billion.
Most customers use Nu as their primary bank, giving it leverage as it continues to expand and providing it with data to inform its next steps. As it scales through its low-cost, tech-heavy platform, it's able to meet its customers' needs and roll out across more demographics without significantly increasing its costs. Its cost to serve declined in the first quarter as its average revenue per active customer (ARPAC) continues to increase, and specifically, increases in tandem with how long a customer is using the platform. That's leading to improved monetization.
Beyond Brazil
Management points out that despite its growth mindset and large opportunities, its experience in Brazil, its most mature market, demonstrates how it can be stable and profitable at scale. It already has 59% of the adult population in Brazil as members. There are still robust opportunities in this market, with millions of customers still signing -- there was a 14% increase in members year over year in the first quarter -- and further potential for cross selling. Management said Brazil is still in its early innings, and it's innovating to capture more market share.