Nu Holdings Stock Surges After Impressive Q2 Results
Nu Holdings Ltd. (NYSE:NU) shares are jumping on Friday after the digital bank topped Wall Street’s estimates in its second-quarter report and Needham raised its price target on the stock.
- Nu Holdings stock is showing exceptional strength. Why is NU stock surging?
Nu Holdings Beats on Both Earnings and Revenue
Nu Holdings reported second-quarter earnings of 22 cents per share, beating the 20-cent consensus estimate by 10% and up 69.23% from 13 cents per share a year earlier. Revenue came in at $5.51 billion, topping Wall Street’s $5.23 billion estimate by 5.48% and rising 50.30% from approximately $3.67 billion in the same period last year. Separately, the company reported gross revenue of nearly $5.9 billion for the quarter, up 39% year-over-year.
Net income reached $1.1 billion for the first time in the company’s history, up 17% from the first quarter and 49% from a year earlier, with return on equity closing the quarter at 33%. Gross profit rose 43% year-over-year and 25% sequentially to $2.4 billion.
Nu Keeps Adding Customers Across Latin America
That profit growth came alongside continued expansion across Nu’s customer base. The company added about 4 million customers during the quarter, bringing its global total to 139 million. Average revenue per active customer climbed to about $17, while the monthly activity rate rose to 83.5%, with Brazil topping 86% for the first time.
Founder and CEO David Vélez pointed to the company’s growth in Mexico as a key milestone, noting that Nu became the country’s largest digital bank with 16 million customers as of July. He also highlighted the addition of a full banking license in Brazil and the launch of a new offering called Croma for higher-tier customers.
Loan Book and Deposits Both Grew at NU
Behind that customer growth, Nu’s balance sheet expanded as well. The company’s total credit portfolio grew 37% year-over-year and 5% sequentially to $39.4 billion, split between $26 billion in credit cards, $10.3 billion in unsecured lending and $3.1 billion in secured lending.
Asset quality also improved during the quarter. The 15-90 day non-performing loan ratio improved by 16 basis points to 4.8%, largely due to seasonal factors. The 90-plus day ratio rose 35 basis points to 6.9%, which the company attributed to the typical seasonal migration of delinquencies from the first quarter.
Needham Raises Price Target On Nu Holdings
That combination of profit growth, customer expansion and balance sheet strength drew a positive response from at least one Wall Street analyst. Needham analyst Kyle Peterson maintained a Buy rating on Nu Holdings and raised his price target to $19 from $17 following the results.
NU Shares Are Soaring
NU Price Action: Nu shares were up 10.84% at $15.44 at the time of publication on Friday, according to Benzinga Pro.
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