Nu Holdings Ltd. 2026 Q2 Earnings Call

Thank you, operator, and thank you everyone for joining our earnings call today. With me on today's call are David Vélez, our Founder, Chief Executive Officer, and Chairman, and Rob Livingston, our Chief Financial Officer. All financial metrics discussed and presented today reflect our managerial P&L framework, which we introduced in the Q4 2025. These managerial measures are important to how we manage the business but are not financial measures as defined under IFRS and may not be comparable to other companies. A full reconciliation report to the most directly comparable IFRS figures is available in our managerial P&L reconciliation report and in the appendix to this presentation. Unless otherwise noted, all growth rates discussed today are presented on a year-over-year FX neutral basis. Today's discussion may include forward-looking statements, which are not guarantees of future performance and involve risks and uncertainties.

Actual results may differ materially from those expressed or implied. Please refer to the forward-looking statements disclosure included in the earnings presentation for additional information. With that, I will now turn the call over to David.

Please go ahead, David. Hello, everyone, and thank you for joining us today.

Thirteen years ago, we started with a simple hypothesis that a bank built on technology with no branches and no legacy to defend could serve hundreds of millions of people better and at a fraction of the cost. Today, I am proud to announce that in the past quarter, for the first time, we generated more than $1 billion in net income. This milestone is a result of our customer obsession translated into an earnings-generating formula. It is also a testament to the tremendous work of our team here at Nubank. Thirteen years later, that hypothesis continues to play out exactly as we envisioned. Our customer base reached 139 million customers, including almost 118 million in Brazil, more than 5 million in Colombia, and at the end of July, Mexico just reached 16 million customers. Engagement continued to deepen alongside that growth.

Our activity rate expanded sequentially to 83.5%, while Brazil's surpassed 86% for the first time. The combination of more customers and deeper engagement continues to drive monetization, with ARPAC reaching $17. Together, they generated $5.9 billion in gross revenue while maintaining a highly efficient operating model with an efficiency ratio of 20%. This operating leverage allows us to continue investing in our three core markets, Brazil, Mexico, and Colombia, while laying the foundation for our international expansion. That is what we have always meant by optimizing for the long term. It is why we can continue building for the next decade while delivering a quarter like this one. Let me walk you through both, starting with Brazil. Brazil remains our largest growth opportunity, and most of it lies within our existing customer base. The mass market alone represents roughly $30 billion in industry gross profit.

We already serve most of that segment, and we are the primary account for approximately 60% of those customers. Even so, there is significant room to deepen those relationships and capture more of that profit pool. That is possible because of the capabilities we have built over the past 13 years. They allow us to expand financial access while delivering a better customer experience, lower costs, and increasingly personalized products. As we built one of the leading financial services brands in Latin America for the mass market, we found ourselves attracting millions of higher income Brazilians that unfortunately we were not able to serve well at the time. In 2021, we launched Ultravioleta, a high-income focused brand and product.

Our nearly 1 million Ultravioleta customers have significantly higher purchase volumes and assets under custody than the rest of our portfolio, with both continuing to grow strongly, up 41% and 37% year-over-year, respectively, in Q2 2026. However, we have realized that there is a meaningful segment between mass market and high income that we could also be serving better. We call this segment super core, and in July, we launched Chroma, a subscription-based tier for our super core customers, a segment with an even larger profit pool than high income, and one where we already have significant penetration. Chroma gives them a dedicated experience, enhanced credit offerings, and a broader set of banking and lifestyle benefits designed to reward customers for concentrating more of their financial lives with Nubank.

That includes NuCel, a free ChatGPT Gold subscription, accelerated savings products, and other benefits across our own ecosystem and partners. Our goal is to develop primary banking relationships, and Chroma is a significant step in this direction for this segment. Of course, the opportunity also extends beyond consumers. We already serve 6.8 million small businesses, making Nubank the largest financial institution in Brazil by number of business customers. Yet we still reach only about one-third of that market. This is how we see the next chapter of growth in Brazil, continuing to expand our customer base while increasingly serving a larger share of our customers' financial lives through better product and segmentation. Let me turn to our other core market.

Earlier this month, Mexican regulators approved our banking license in the country, and we are happy to be born as the largest digital bank in Mexico, with more than 16 million customers. That completes our transformation from a credit-first fintech into a full-scale digital bank, and it unlocks capabilities we did not have before. Payroll direct deposits strengthen primary banking relationships and customer engagement. Higher deposit insurance increases confidence in holding balances with us. Those deposits fund a broader credit offering while allowing us to expand into new products and customer segments over time. Financial inclusion has been a defining part of the journey. For 35% of our customers, we were their first bank account. For 52%, their first credit card. Today, our customers live in 98% of Mexico's municipalities, with nearly 80% outside the country's major cities, demonstrating how technology lets us reach customers everywhere.

But what excites us most is what comes next. Mexico remains at an earlier stage of digital financial adoption. Bank account penetration has increased from 44% to 63% over the past decade, yet 85% of Mexicans still prefer to pay in cash. Yet the pace of change is accelerating. Digital payments in Mexico continue to compound year after year. In the first half of this year, SPEI transfers below $5 grew more than 60%, and today, nearly half of all transfers in the country are less than $25. These are everyday transactions and a clear sign that cash is steadily giving way to digital payments. In June, the central bank introduced new rules that every financial institution must implement by the end of the year. The objective is to simplify the experience across different payment rails.

Going forward, consumers will see a standardized interface and follow the same steps regardless of who they are paying or how they choose to pay. Since these rules are mandatory for the entire financial system, they strengthen network effects and should further accelerate digital payment adoption. We have seen this movie before. In Brazil, the regulatory agenda fostered competition and digital innovation, expanding financial inclusion, driving everyday usage, and ultimately accelerating credit adoption. Pix is the clearest example. We offered a simple and seamless experience from the very beginning, became the market leader in transaction volume, and turned that into primary banking relationships. That environment rewarded exactly the digital model we had built. We believe Mexico is following a similar path. We can already see it in our numbers. Today, we reach 16.5% of Mexico's adult population, essentially the same penetration we had in Brazil in 2020.

The cohorts are monetizing earlier. At the same stage, ARPAC in Mexico is $12.3 against $5.6 in Brazil. That reflects higher income per capita, better unit economics in the credit card product, and higher interest-earning balances, all at a lower cost to serve. Mexico is Brazil's playbook, running faster and with the benefit of the scale we have today. That is how we broke even in 6 years in Mexico, compared with 8 years in Brazil. To recap, customer behavior, technology, and regulation are now all moving in the same direction. Taken together, they create one of the most compelling opportunities we have ever seen in Mexico. As more financial activity moves onto our platform, we build deeper customer relationships, gain better underwriting insights, and expand our ability to serve a larger share of our customers' financial lives.