Earnings reviews to read from this current season:

NSB growth was above 10% excluding North America (UCAN). Mix-shift, stay length and lead time trends ex-UCAN were all called stable. The lead time note is important, as it depicts consumers willing to make large purchases for services well in advance. That doesn’t happen when the world is panicking and the consumer base is economically struggling. Lead times were quite pressured during April and May trade drama; they fully normalized by June, with some Y/Y elongation actually kicking in by July.

In North American specifically, NSB rose at a low-single-digit clip Y/Y. Early in the quarter, trade war drama and weak Canada-to-USA demand led to significant UCAN headwinds. As those tensions stabilized and improved, UCAN growth accelerated accordingly. Specifically, growth improved M/M from April through June and kept gaining steam through July. There is still weakness in terms of Canadians traveling to the USA, but they’re making up for that with nights booked elsewhere, while Americans are feeling more and more confident. These two countries are 30% of this total business. As they go, Airbnb goes… and fortunately things are going better. I do not think the services and experiences launches (more later) are remotely close to large enough to explain this improvement, so it is core business progress as the backdrop improves.

Q3 revenue guidance of $4.06B was slightly better than expected and represents 9% Y/Y growth. The team is "encouraged by trends” so far during Q3 (including the important UCAN acceleration in July) but was quick to remind us that growth comps get more difficult during Q3 and Q4. For context, GBV rose by more than 17% Y/Y during Q3 2024, which is a full 5 points faster than this quarter’s Y/Y comp.

They also reiterated 34.5%+ EBITDA margin guidance for the year and called for between $2B and $2.23B in Q3 EBITDA. This was at least 6.9% better than expected, although estimates just dipped from $2B to $1.88B right before the report. They didn’t explicitly say $2.23B was the ceiling, but they said EBITDA would be above $2B and that EBITDA margin would be below 52.5%. Airbnb lowered new business expense guidance from $225M to $200M for the year. Finally, the team guided to stable Q/Q NSB growth (~7% Y/Y) and 0% constant currency (CC) ADR growth, with modest nominal growth driven by foreign exchange.

ABNB trades for 27x GAAP EPS and 15x EBITDA. GAAP EPS is expected to grow by 3% this year and 12% next year. EBITDA is expected to grow by 5% this year and by 11% next year.

More on Geography-Specific Demand:

Its expansion market playbook continues to bear reasonable fruit. As a reminder, most of its business is in 5 countries, with places like Korea, India, Japan, Germany, Brazil and many others offering significant room for adoption. They are determined to keep putting the local teams in place needed to nurture growth in a highly relevant manner. There were more signs of this working during the quarter and showing how globally transferable this model can be. The growth gap between expansion and core markets widened Q/Q from an already large 100% difference.

In Europe, the Middle East and Africa (EMEA), ADR rose 3% CC Y/Y, with Germany the noted standout. NSB rose by 10%+ Y/Y and accelerated considerably in that European nation. In Latin America, NSB growth was nearly 20% Y/Y, as recent investments in Brazilian marketing clearly continue to work. Brazilian NSB expanded by nearly 20% Y/Y and first-time customers rose by the same amount. New payment financing methods in that country were also a big help. LatAm ADR actually fell 3% Y/Y in that region, but rose 2% Y/Y CC.

In Asia Pacific (APAC), NSB growth was around 15% Y/Y and ADR rose 1% Y/Y CC. Considering efforts in Korea have been very successful so far, they extended that focus to Japan. Early results were called “encouraging,” with 15% Y/Y growth in first-time customers there.

Core Products:

Airbnb continues to extract more platform engagement and conversion through simple, yet highly targeted and data-driven improvements to its core offering. Work on checkout flow, authorization and options as well as upgraded messaging tools (for hosts and guest groups) are all working. The travel giant is also already enjoyed 15% customer service inquiry automation through AI innovation. All of these small updates combined to form a material revenue lift during the quarter — and there’s encouragingly more to do.

On supply volume and quality, things continue to look better. Growth slightly outpaced NSB, which should support affordability. And since prioritizing better supply in 2023, rather than accepting whatever listing comes their way, they’ve cut 500,000 total options. Its guest favorites tab is another way to steer customers towards the best listings, thus further improving retention and engagement. Together, listing pickiness and this favorites tab are directly uplifting customer service issues and scores, as well as chargeback rates. It’s doing a better job with making sure hosts are being honest about their housing options, while diminishing double-booking risk and other sources of marketplace fraud.

And to improve supply availability rates, its co-hosting network is doing the trick. This connects individual hosts to a second manager able to handle reservations and take the headache out of individually listing a home. This is helping hosts offer their homes far more frequently and has been a “home run” so far.

New Products – Airbnb Services & Experiences:

As a reminder, the 2025 summer product release event was especially significant. It included Airbnb’s second attempt at meaningfully expanding beyond its core offering. Specifically, it announced the Airbnb Experiences (“Experiences”) re-launch and a new Airbnb Services (“Services”) offering.

Experiences makes travel more personal. It moves away from monotonous tourist attractions by connecting guests with local experts who have a keen understanding of what there is to do, and what these people want to see. Early examples include unique tours, cooking classes, private workouts and much more. For those wanting something especially remarkable, they’re also debuting “Airbnb Originals.” It matches guests with famous athletes and celebrities to up-level the memory-making. You do not need to purchase a traditional listing to use these offerings, which means Experiences and Originals can eventually turn into a top-of-funnel tool alongside augmenting cross-selling. Experiences are constantly vetted and re-evaluated, with lower-quality options habitually removed.

To deepen differentiation and turbo-charge Experiences supply growth, Airbnb added partnerships with Tour De France, FIFA World Cup and Lollapalooza while it extended its Olympic Committee partnership. It’s very easy to see how exclusive relationships with these ubiquitous events can create ample opportunities to offer special things that others simply can’t match. That’s how this can work… with pricing power… and with a defensible value proposition. Airbnb is working with many other 3rd party vendors to create critical supply mass for this product as quickly as possible.

The other big announcement was Services. This offers add-ons for bookings, as well as standalone purchase options. Airbnb knows folks generally want to do other things besides solely stay at their listing. With this, people can book personal trainers, hair appointments, massages and more. Hosts will have an average of a decade of experience, with guests getting access to easily book on “detailed listing pages.” As I’ve said before, I do think the risk of disintermediation for this product is higher than for ABNB’s core business. If I travel to Mexico and hire a great private chef for the evening… it’s easy to stay in contact with them and book directly the next time I’m there. While that’s also true for homes, that option comes with much higher risk. Booking a residence without Airbnb means the listing could be fraudulent or the host could have easily approved several reservations for the same weekend, pocketed the money and disappeared. When traveling far away from home, I think knowing the listing will be exactly as presented (and actually available) discourages disintermediation. I don’t think the stakes are as high with Services and worry a bit that this marketplace could be cut out of some transactions. We shall see.

It’s very early for these two products, but momentum so far was called “strong.” Guest feedback has been positive (4.93 star rating vs. 4.80 for its core business) and “potential host interest has been overwhelming.” Airbnb has already gotten 60,000 applications. Media attention has been “significant” and a global tour from its leadership team amplified this momentum.

“I’m very bullish. I think a large percentage of travelers on Airbnb would love to use Airbnb Experiences.”

CEO Brian Chesky

And interestingly, both products are unleashing modest local consumer demand. For instance, 40% of Airbnb Originals volume is from locals. That eventually could untether Airbnb’s addressable market from the (already massive) travel space, to add entertainment and daily services. That would be great for frequency, engagement, retention and overall growth. For Services specifically, the local relevance is even more compelling. It’s a brand new segment (while Experiences was re-launched) and is much smaller than Experiences, but already 10% of this business is from local residents. Airbnb envisions an eventual massive catalog of categories to choose from. Right now, they have 10. Dozens more are coming and this team is even more upbeat about the Services opportunity than the Experiences business. 

Again… excitement for both products will not lead to material revenue contributions in the coming quarters. Airbnb’s core revenue bucket is simply too massive. But a good start is a prerequisite for eventual, needle-moving scaling. They’re effectively walking before they can run. Right now, Airbnb is a one-trick pony. It has built a gigantic business with one product, and the growth engine for that segment is clearly slowing. If it wants to deliver double-digit top-line growth in the years to come (and it does), these tools need to eventually be real contributors.

This quarter, the new business progress will be focused on boosting product attach rates in cities like LA and Paris.

“While we don't expect meaningful revenue from our new businesses in the near term, we expect -- excuse me, we believe the opportunity is significant and are building with a multiyear view.”

CFO Ellie Mertz

New Tech Stack & App to Enable Successful Experiences & Services Launches:

Airbnb spent the last few years overhauling and modernizing its technological foundation to give these product launches a better chance at success. This is how it upgraded the app and website interface to unlock these new offerings, without creating merchandise clutter or confusion. Product discovery is already noticeably better, and that’s key. Confusion was one of the reasons Airbnb Experiences did not work the first time. They’re determined to make sure that doesn’t repeat. The new user interface (UI) has a dedicated page of Experiences and Services, with personalized suggestions, itinerary and upgraded messaging. It also features a listing process upgrade to make adding new services and experiences seamless for hosts.

“The biggest problem we've had historically with attach rates is that people didn't know Airbnb even had experiences.”

CEO Brian Chesky

One exciting new product for the app is its “Trips tab.” This organizes and displays travel itinerary for guests and is rapidly gaining traction. While this isn’t all that impactful to immediate growth, this page is ripe for enhancing the cross-selling momentum. Airbnb can seamlessly leverage its extensive customer data profiles to offer personalized suggestions across its Services and Experiences segments. AI will be a big part of this – just like it’s already helping customer service quality and will soon be adding to in-app search.

Marketing:

Leadership doesn’t plan to sharply increase marketing spend for Services or Experiences to support scaling. It did some dedicated advertising right when the two products debuted, but not much since then. Instead, it’s focused on holistically marketing its growing product suite – housing, services and experiences. This fall, it has campaigns planned to showcase how all of these products work quite well together.

For marketing channel usage, it’s shifting away from linear TV and towards social media. Leadership thinks it has the “most relevant brand for young American travelers” and sees those consumers exploring travel through more of a “browse and discover” process. It used to be more targeted, highly-intentioned search. Based on this, Airbnb feels social channels are perfect. This change in behavior patterns also means more consumers are coming to their marketplace with an open mind and less listing pickiness vs. the searchers who already have their minds made up.

How Can USA Growth Accelerate?

“We are not satisfied with 10% Y/Y revenue growth. We want the company to reaccelerate. We think we have a great plan to reaccelerate.”

Founder/CEO Brian Chesky

A company re-acceleration will start and end with North America. Sell-siders were noticeably frustrated with this geography’s lack-luster growth, which has been a theme for a few quarters. How can they re-accelerate things? Well… July sounds like it was off to a good start. Near-term, re-acceleration will come from app usability improvements, easier host onboarding, co-hosting growth, payment method optionality, targeting under-penetrated states in the U.S. and accelerating hotel supply growth. In aggregate, these things have already generated hundreds of millions in incremental revenue. Services and Experiences will not be large enough to deliver this upward bend in the growth curve for a while.

More Notes:

I would classify this quarter as “sleepy.” It wasn’t bad. CC growth ex-Easter accelerated sequentially and NSB growth modestly outperformed leadership expectations. At the same time, this was a growth darling just a couple years ago that has since seen top-line expansion sharply decelerate. The new businesses they’re excited about will not be material until at least 2027 and the plans they have to accelerate North American growth until then aren’t all that exciting.

Regardless, I still find myself somewhat interested in owning this name. The regulatory risk we’ve all been worried about for years is stable or improving across the globe. They’re still 10% of the size of the hotel industry in the USA and now seem dedicated to adding that supply to plug frequent menu holes. That’s a good thing.

I also think Experiences and Services can both be massive businesses eventually. They can help growth… just not yet and not in the near-future.

With 16x forward FCF multiple, 10% FCF compounding in 2026-2027, a buyback worth 10% of its shares, a cash pile worth 14% of its market cap and a global verb, I think there’s real value here. Alongside ServiceNow, this is the non-holding I am most interested in owning. A sleepy quarter? Yes. But I think this giant is hibernating… not dead. It’s laying the foundation for future growth and an acceleration that Founder/CEO Brian Chesky is determined to deliver.

Read my Nu Deep Dive here to learn about the company in detail.

On deposits, 28.1% Brazilian growth brought that book to $27.8B. Mexican deposits more than doubled to $6.7B Y/Y, as the ramp there continues to outpace Brazil at the same stage of maturity. Colombian deposits rose from $200M to $2.1B Y/Y. It added $300M in deposits sequentially compared to $500M last quarter and $400M the quarter before that. Fantastic progress here… just like in Mexico and Brazil (and many more markets in the future).

On customers, it now has 12M total in Mexican vs. 7.8M Y/Y. That’s the second consecutive year of adding 4.2M customers, rapidly bringing its population penetration from 4% to 13%. It also crossed 10% of the Colombian population as customers this quarter. A third country turning into a massive success story for Nu. Great evidence of this business model being globally relevant. Finally, it now has 60% of the Brazilian population as customers vs. 55% Y/Y. For more stats: 

For more signs of things going well in Mexico, it jumped from 5% credit card market share two years ago to 9% today, with 25% of all new credit cards in Mexico over the last year issued by this firm…. Just 6 years after it launched operations there.

A new company credit model debuted during Q2 that enabled much higher Brazilian credit limits. This required significant provision growth, as it front-loaded expected losses amid heightened overall volume. This expense occurs before incremental revenue from higher credit card limits is enjoyed, thus creating a large short-term margin headwind for Nu. Exciting to see Q/Q margin strength despite this ephemeral item. Credit loss allowance expense (CLAE) on an absolute basis (not as a percent of the portfolio) rose Q/Q because of this (and rapid growth). It fell when excluding this component.

“Growth isn't coming at the expense of sustainable results. Quite the opposite, we're proving that it's possible to scale efficiently with discipline and still generate stronger earnings… We're not only scaling, we're unlocking new markets, pioneering adoption in underpenetrated segments and building the foundation for the long term.”

Co-Founder CEO David Vélez

Nu trades for 18x forward EPS. EPS is expected to grow by 31% this year and by 38% next year. Estimates should rise modestly following this report.

Definitions:

Where there is rapid credit growth… there must be prudent underwriting and proper risk scoring to avoid ballooning losses. Things look very good for Nu in that regard. As you can see above, 15-90 Day NPL data looks quite healthy despite durably rapid credit origination growth. The 30 bps of Q/Q improvement did get some help from seasonality, but the improvement was 10 bps in excess of those typical trends. Good to hear. 90+ Day NPL rate was in-line with seasonality and showed nice Y/Y improvement, while CLAE / Total Credit Portfolio matched its lowest level in 7 quarters. Again… Everything here looks good.

Considering that, why did GPM and Risk-Adjusted NIM both sharply fall Y/Y? After all, these are the two best metrics for measuring risk pricing. Great question. Just like last quarter, this is a byproduct of Nu’s successful expansion into Mexico and Colombia. It does not have the maturity or economies of scale that it enjoys in Brazil, which means its cost of funding is a bit higher, as it temporarily needs to pay more to attract deposits. They are exceedingly confident that, over time, this NIM headwind will dissipate. And for now, I enthusiastically say go for it. Nu should be laying the foundation for decades of scaling in these two newer markets. It should be using wildly promising demand signals as a cue to lean in and raise its overall opportunity. And so it is. 

With this stellar team, I’m confident that margins will follow eventually… and that process will start to play out during Q3 despite growth spending remaining aggressive. With its Mexican deposit base now in a great spot, it materially cut its yield in that market, shifting some of the focus away from maximum deposit growth to higher gross profit and NIM. The reaction so far has been as expected, with no material deposit churn. That’s because of the still compelling rate, and because Nu’s product suite has gotten far more compelling through Oxxo withdrawal partnerships and other things in that nation. They don’t need to pay as much for deposits as the value proposition gets better and their brand awareness rises. It’s exciting to think a company that has tripled net income in two years has only begun to prioritize optimizing margins in its second-largest market.

Credit health remains strong as of today (August 14th, 2025). They continue to obsessively look for signs of macro weakness across Brazil and Mexico, but are not seeing anything concerning in the slightest.

“We are very confident in our opportunity to win in Mexico, and our focus remains on disciplined execution and long term-value creation.”

Co-Founder CEO David Vélez

Credit Portfolio (credit cards & traditional loans):

Starting with the credit card portfolio, 55% Y/Y FXN Interest-earning portfolio (IEP) growth outpaced the overall card growth, as mix-shift towards that type of product keeps playing out. Specifically, IEP was 29% of the portfolio vs. 26% Y/Y. Why should you care? This balance sheet optimization has been wonderful for turbo-charging net interest income (NII) growth and NIM. Nu feels that 29% for IEP is probably a good long-term level, so the balance sheet optimization NIM tailwind from credit cards should be largely done. For context, Nu’s 29% IEP skew compares to 9% for the industry, as its mix of credit cards is convincingly more resilient than revolving credit reliance and lower cost too. That should mean best-in-class credit card ROE.

While balance sheet optimization is slowing for credit cards, there are miles of runway on the traditional loan side of the book. That will support expanding NIM over the coming years. For context, Nu’s loan-to-deposit (LDR) is 43% vs. 110% for the average Brazilian incumbent. It doesn’t want to get to 110%, but it wants to raise 43% much higher in the coming years.

Notably, a lot of raising LDR will entail sustainably rapid growth in its secured lending product. And while secured lending does have lower yields than unsecured lending or credit cards, this will still be a NIM tailwind. Why? Because Nu isn’t predominantly growing secured originations at the expense of unsecured demand. It has a massive capital cushion without even considering the $2.8B at the holding company; it can allocate that whenever it wants to. It’s servicing all of the unsecured and card demand that it wants to, with plenty of liquidity left over to play with. Swapping low-yielding cash equivalents into secured lending is still a boost to net interest income, even if the boost isn’t as dramatic as with unsecured. 

The team was asked about 1% Q/Q loan origination growth, which is slower than the double-digit Q/Q growth in each of the prior 3 quarters. Seasonality was a big piece of this. It also had a fantastic Q1 2025, which led to tougher Q/Q comps, as it debuted several new products last quarter that unleashed pent-up demand. And while both factors did contribute to slower growth, there was another massive headwind on the secured side. There was a high-profile fraud scandal uncovered within the Brazilian Institute of Social Security (INSS) this quarter. Key officials and large organizations signing retirees up for benefits without their consent and deducting fake “membership fees” from their benefits. Gross. This led to large-scale disruption and secured INSS lending volumes falling by roughly 52.5% for the sector and by 50% for Nu. The company took a bit of market share, but this held things back considerably for everyone. With this context, I think Nu’s entire quarterly report looks even more impressive. The team expects this to be resolved by next month and for there to be a surge in INSS originations for delayed borrowers. Q3 growth tailwind incoming. 

On the private payroll secured lending side of things, in March, Brazil launched a new lending product for its FGTS program (mandated savings account). This allows borrowers to use their funds as collateral for secured originations. Nu is not leaning into growth here like some competitors. Why? Because the program isn’t currently allowing them to price risk adequately. First-time payment defaults will be well over 10% for those issuing these loans, which is higher than it will accept for the given yield. They know they can be the lowest-cost provider here and undercut others on rates, so being the first mover isn’t necessary. They need to wait for regulations to allow it to charge adequate rates on these loans and they think that will soon come.

For unsecured lending, Nu is increasingly confident in underwriting models and strong 2025 and 2026 origination growth. They now have a 20% market share of Brazilian unsecured personal loans.

While Brazil is obviously the largest portion of its credit book, expansion elsewhere is going very well. 52% Mexican credit card customer growth and 34% growth in Colombia both greatly led the overall business.

Existing Customer Runway – More Products & Customer Maturation:

Considering it already has 60% of Brazil’s population as customers, net revenue expansion from existing customer cohorts will need to become a more and more powerful growth driver. It has 30% of the primary bank accounts in Brazil yet just a 5% gross profit market share. Meaning? There’s a 6x gross profit opportunity simply by rounding out the product suite vs. incumbents, supporting product awareness and driving cross-selling. Nu will surely keep briskly growing customer count… This phenomenon will merely amplify that demand tailwind. 

And while it will be hard at work to nurture cross-selling, simply allowing its customer base to mature and naturally discover more Nu products is helping all on its own. For context, monthly ARPAC is $12.20 on average, and $27.30 for its most seasoned customer cohort. Another large opportunity for growth… and an opportunity that keeps brightening, as $27.30 compares to $26.00 just one quarter ago. Incumbent banks are at $40.

Summarizing 3 giant margin tailwinds to look forward to:

Preserving Edges:

In my mind, Nu is the SoFi of Latin America. Both companies match the cost advantages enjoyed by incumbents thanks to their banking charters. They also emulate the cost advantages of other disruptors, thanks to their branchless, app-centric business models. From there, they infuse unique cost edges vs. everyone else by owning their own tech stack (amplified by Nu’s Hyperplane purchase) and thus shedding expensive reliance on 3rd party vendors. And finally, best-in-class customer activity rates raise cross-selling, lower customer acquisition cost intensity and boost the lifetime value ceilings. All of these advantages are slightly offset by some incumbents having more products than Nu, but it’s only a matter of time before that gap closes. 

“By meeting customers' needs at every stage of their financial journey, we not only deepen loyalty but also multiply the ways we can create value.”

Co-Founder CEO David Vélez sounding exactly like SoFi CEO Anthony Noto

Even before that closing happens, Nu’s average monthly cost to serve is far lower than incumbents (see below) and its cost of funding is just 91% of blended interbank rates (little over 80% in Brazil). As I say all the time, banking is a commodity. You can drive some differentiation with a better user interface and consumer convenience. But? You can drive a lot more by creating these durable cost advantages and passing some of the savings onto customers via better rates, higher deposit yields, loyalty program perks etc. That’s how you stand out. That’s how Nu is standing out.

Upgrading an Already Strong Leadership Team:

Nu added 3 high-profile leaders to its team this quarter. Eric Young is its new CTO. Most recently, he was the Senior VP of Engineering at Snapchat, a VP of Engineering at Alphabet, and held several VP roles with Amazon. Ethan Eismann is the new Chief Design Officer. He was most recently the Senior VP of Design at Slack, a Design Direct at Airbnb, and Head of Design at Uber. Finally, and I think most excitingly, they hired Roberto Campos Neto as their Vice Chairman and Head of Public Policy. If that name sounds familiar, it’s because he was the President of Brazil’s Central Bank until the end of last year. Before that he was the Head of Markets at the $143B Banco Santander. Three great hires to usher in the next era of profitable scaling and will accelerate Nu’s international expansion.

“These additions reflect our ongoing commitment to having the best possible team in place for the next cycle, a cycle that will require even greater scale, complexity and ambition.”

Co-Founder CEO David Vélez

More Notes:

Great quarter for a special company. It’s not normal for Nu to have 60% of an entire population as customers 12 years into existence. It’s not normal for Nu to already have 10%+ of Mexico and Colombia as customers a half-decade into launching. In the absolute best of ways, this is not a normal company. It’s a company with a leadership team capable of sprinting to stay ahead on the tech side, while prudently managing credit risk and augmenting company efficiency. It’s a company that gains immediate traction with whatever it launches in all of its markets. Nu has every reason to be a long-term compounder, with fantastic margins and a durable value proposition. It has all the ingredients needed to win in banking and a consistent track record showing just how capable it truly is. At 18x forward EPS, I remain a very happy shareholder.