Nu Holdings was founded in Brazil 11 years ago. It’s a financial technology (fintech) firm with a broad range of credit, savings and other services for its clients. It aims to drive financial inclusion via easier access and seamless use cases as Latin America modernizes its monetary systems. The company calls 54% of Brazil’s population its clients (vs. 36% in mid-2022) and has more recently made steady progress in Mexico and Colombia. It has capitalized on a strong LatAm demographic featuring:

Its total market opportunity between the three nations is 14% of the USA’s total GDP and 60% of the total LatAm GDP. The competitive dynamics outside of the U.S. are far easier, the economic growth is faster (and more volatile) and the markets are less efficient. As we’ll see later, that same inefficiency breeds opportunity.

Here, we will explore how Nu has won with these products to date, its prospects, its risks and the investment case overall. I read everything there is to read on Nu; I dug through filings; I watched every company video; I interviewed the Chief IRO who took the company public; I scraped together insight from every single buy & sell-side contact I have in the space. This piece is the culmination of borderline-obsessive research organized and summarized in a way that shrinks months of learning down to 60 minutes. Let's begin.

Nu’s core products are its credit cards, zero hidden fee and commission bank accounts, and personal loans. Aside from that, Nu provides investment accounts with the broadest asset-class access, lowest fees and lowest minimums on the market. With NuInvest, investors can enjoy the cheapest access to equity markets, treasury bonds, agriculture bonds, real estate and the very first Brazilian ETF with a dividend. Nu handles renewal of all expired bonds for its fixed income products, which is unique in LatAm. It also offers insurance products in a creative, asset-light fashion (discussed later), a shopping marketplace with exclusive discounts and so much more. Every product is tied neatly into a slick, easy-to-use app with 24/7 liquidity and customer service. And as you can see below, traction is excellent.

Everything is growing nicely as of its most recent quarter while active customers rose 27% Y/Y to 82.6 million:

Nu also offers something called “Caixinhas” (or “Money Boxes”) in its app for savers. This is a complementary tool to allocate money into buckets to meet specific financial goals (similar to SoFi vaults). It can be used for financial planning, tax preparation and even as collateral to raise credit limits. For Nu’s merchant accounts (discussed in detail later), these money boxes can be used for corporate budgeting and investing into highly liquid, low risk federal bonds. These are available for Brazilian and Mexican customers, and soon to be Colombian too.

The growth engine for Nu is wonderfully simple. It generates revenue via interest income, interchange fees and some commissions on products offered through partners. Its North Star is to rapidly compound customers and revenue per customer while maintaining one of the lowest cost banking platforms in the world.