Nu Holdings' Revenue Durability Takes Center Stage Amidst Profitable Growth and Persistent Risks

What happened

A recent analysis highlights Nu Holdings' rising revenue durability and deeper multi-product monetization as reshaping its growth story towards steadier performance. This focus emerges as Nu has transitioned from a $365 million loss in 2022 to a $1.97 billion net income in 2024, with trailing twelve-month revenue reaching $12.85 billion by June 2025. Key enablers include high customer engagement, averaging 4.1 products per active customer, and a low-cost digital model that underpins scalable profitability. However, significant risks remain, including exposure to unsecured consumer credit in emerging markets and pending regulatory approvals for banking licenses in Mexico and the U.S. Investors are now scrutinizing whether this enhanced revenue durability can sustain growth and justify current valuations amid these ongoing challenges.

Implication

The emphasis on revenue durability signals a shift in investor focus towards sustainable monetization, which Nu supports with strong product penetration and deposit-funded growth. However, earnings remain sensitive to credit loss expenses, which totaled $3.17 billion in 2024 and could spike in an economic downturn. Regulatory outcomes, such as final approval for the Mexican banking license, could either unlock new revenue streams or impose capital burdens that compress returns. At a P/E of ~30x, the stock already prices in high growth, so durability must be proven to support further upside or mitigate downside from emerging-market volatilities. Thus, while the narrative supports a 'steady performance' outlook, a cautious stance is prudent given the interplay of monetization gains with macro and regulatory risks.

Thesis delta

The new analysis reinforces revenue durability as a critical component of Nu's investment thesis, aligning with the existing 'POSSIBLE BUY' stance that balances growth potential with credit and regulatory risks. It does not fundamentally shift the thesis but underscores the importance of multi-product monetization in sustaining profitability, warranting even closer scrutiny of credit metrics and regulatory progress as key validation points.