1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. đť•Ź Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. đť•Ź Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
NU
Event Date
2021-12-09
Sector
Financials
Subsector
Financial Services
Offer Range
—
Shares Offered
289.15M
—
Implied Upside vs Midpoint
Description
Our mission is to fight complexity to empower people in their daily lives. In 2013, we chose to begin our journey by disrupting the financial services market in Latin America, the market value of which we estimate will reach approximately US$1 trillion in 2021. This opportunity includes approximately 650 million people in Latin America according to the World Bank, many of whom we believe are underbanked and deeply unsatisfied with their legacy bank relationships, or completely unbanked. We are in the early stages of technology companies revolutionizing a broad range of services by putting the customer at the center of their strategies and architecting experiences based on mobile-first and cloud-based models. We believe new technology-driven companies can capture market share from legacy providers across all industries, expand the size of addressable opportunities and operate with superior economics. We also believe there is a significant opportunity to use the latest technologies and business practices to create new and more user-friendly experiences for individual consumers and SMEs that are simple, intuitive, convenient, low-cost, empowering and human. As we pursue our mission of empowerment, we are building a company focused on connecting profit to purpose in order to create value for all our stakeholders and deliver a positive impact on the communities we serve. We believe Nu is one of the world’s largest digital banking platforms (based on number of customers), and one of the leading technology companies in the world, with 48.1 million customers across Brazil, Mexico and Colombia as of September 30, 2021. We are building our business based on four core principles: (1) a highly curated customer-centric culture that permeates everything we do; (2) the prioritization of human-centric design across all of our mobile apps, products, services and interactions to create extraordinary customer experiences; (3) the development of advanced proprietary technologies built from the ground up by some of the best talent from around the world; and (4) the utilization and optimization of data science and powerful proprietary models that support every aspect of our business. We combine these to create a self-reinforcing business model that we believe enables us to serve our ecosystem of customers and partners more effectively as we grow to generate significant impact to our stakeholders and sustainable competitive advantages in the marketplace. Together, these have compounded since our founding to produce: • A Digital Banking Leader – As of September 30, 2021, we had 48.1 million customers, including approximately 28% of the population of Brazil aged 15 and above. We were also ranked as the #1 Bank in Brazil by Forbes for each of the past three years, the #1 Digital Banking App in the World by Pymnts.com in 2021, and Latin America’s Best Bank and Best Digital Bank by Euromoney in 2021. • One of the Most Loved Companies and Trusted Brands – By delighting our customers, we have created a powerful reputation and a valuable brand that is highly regarded in our markets and around the world. For example, we were listed in 2021 by TIME as one of the 100 Most Influential Companies in the world and by CNBC as one of the Top 50 Disruptors in the world. We were also ranked as the #1 Most Loved Brand in Brazil by eCGlobal in 2021. • A Powerful and Expanding Ecosystem of Solutions and Services Across the Five Financial Seasons – We have developed a growing suite of essential and high engagement financial solutions designed to create superior customer experiences across the Five Financial Seasons of a consumer or SME customer’s journey. These Five Financial Seasons include (1) Spending with our credit and debit cards, QR code-based and PIX instant payment arrangements, WhatsApp Pay and traditional wire transfers; (2) Savingwith our Nu personal and business accounts; (3) Investing with our direct-to-consumer NuInvest digital investment platform; (4) Borrowing with our transparent, easy-to-manage credit cards and personal loans with limits that grow over time as users build their credit histories with us; and (5) Protecting with our insurance solutions. We have also broadened our ecosystem by adding products and services from marketplace partners to our platform, such as mobile phone top-ups, foreign remittances and secured loan products—all under the Nu brand and with the same customer experience as with our proprietary products. • A Highly Engaged and Loyal Customer Base – We have built a strong reputation with our customers for being fair, transparent, trustworthy and high-quality. In addition, we have developed a strategy to cultivate our customer relationships to foster new referrals and higher deposit and spending rates. As a result, we (1) acquired approximately 80%-90% of our customers organically on average per year since our inception, either through word-of-mouth or a direct unpaid referral from an existing customer without incurring direct marketing expenses; (2) received a Net Promoter Score, or “NPS,” of 90 in Brazil and 94 in Mexico, which we believe far exceeds incumbent banks and all other major local financial technology companies; and (3) have become the primary banking relationship for over 50% of our active customers who had been with us for more than 12 months as of September 30, 2021. We consider ourselves the primary banking relationship for those of our active customers who had at least 50% of their post-tax monthly income move in or out of their NuAccount in any given month. • Advantaged Unit Economics – We operate with favorable unit economics, as demonstrated by our ability to recover our customer acquisition costs, or “CAC,” with cumulative contribution margins in fewer than 12 months on average, while continuing to expand revenue and contribution margins significantly thereafter. We measure our customer acquisition efficiency by comparing the lifetime value, or “LTV,” of acquired customers to the CAC of those acquired customers to calculate an “LTV/CAC ratio,” which we estimate to be greater than 30x. We believe these strong economic measurements are supported by our ability to: – Acquire customers organically at a low CAC – For the nine months ended September 30, 2021, our CAC was US$5.0 per customer of which paid marketing accounted for approximately 20%. Based on our internal research and publicly available information, we believe our CAC is one of the lowest across consumer FinTech companies in the world. In addition, we believe our organic customer acquisition model is among the best-in-class as evidenced by the fact that we have acquired approximately 80%-90% of our customers organically on average per year since our inception. – Increase monthly average revenue per active customer, or “Monthly ARPAC” – For the three months ended September 30, 2021, our Monthly ARPAC was approximately US$4.9. For customers who were active across our core products, which include our credit card, NuAccount and personal loans, we had monthly ARPACs in the US$23 to over US$34 range for the month of September 2021. We estimate that the monthly average revenue per active retail customer for incumbent banks in Brazil was approximately 10x higher than ours in the first six months of 2021. While we may not reach these levels because the vast majority of our products have no fees, we believe we can increase our Monthly ARPAC meaningfully over time by (1) capturing greater customer wallet share across our customers’ existing products and (2) cross-selling additional products to existing customers. • Our World-Class Talent – We have been able to assemble one of the most international teams in Latin America. Our employees represent over 45 different nationalities and bring experience in scaling some of the largest technology and financial services companies in the world. We believe our culture, mission and commitment to innovation has helped us become a hub of the best engineering talent not only in the region, but also internationally. • Compounding Growth at Scale – Though we have incurred a US$99.1 million loss for the nine months ended September 30, 2021, and a US$171.5 million, US$92.5 million and US$28.6 million loss for the years ended December 31, 2020, 2019 and 2018, respectively, we have grown our customer base and our revenue at high annual growth rates. As of September 30, 2021, we had 48.1 million customers, which represents an increase of almost 9x from 5.2 million as of September 30, 2018 (or a compounded annual growth rate, or “CAGR,” of 110%. Of these 48.1 million customers, approximately 73% were monthly active customers as of September 30, 2021. In the three months ended September 30, 2021, we added an average of over 2 million net new customers per month across Brazil, Mexico and Colombia combined. • Regulatory – We are committed to open, collaborative and transparent relationships with public officials as we work to improve how people are served by the financial sector. Over the past several years, Nu has been very active in some of the latest landmark regulations for the financial system in Brazil, such as: Brazil’s real-time payment system PIX, open banking, portability of checking accounts, cybersecurity and others. By applying our values to regulatory proposals we believe we can help shape a more competitive landscape for Latin America’s financial sector. Through this process, we believe to have established a positive reputation and an open and collaborative relationship with regulators in the countries we operate. • Nu Impact – We have a strong commitment to advancing ESG efforts, which is reflected in our “profits with a purpose” approach. We believe in shared value creation for all our stakeholders, with ESG integration and transparent governance in all of our decision-making processes. We are committed to making a positive social impact on the lives of our customers and the communities we serve. Our business reaches 100% of the municipalities in Brazil in line with our mission to provide financial access and literacy, which we view as crucial to inclusive growth and sustainable development. We estimate that we have provided the first credit card or bank account, as of September 30, 2021, to approximately 5.1 million people. With this access, based on internal survey data, more than 67% of our customers say they have gained more financial independence due to the use of our financial services and 80% reported they could overcome unforeseen financial issues as a result of the access to our credit products. Our strong focus on impact allows us to recruit and retain the best talent and diverse teams, helping to ensure that we have the depth of perspectives to design the best human-centered customer experiences. As of September 30, 2021, among our employees in Brazil, 32.3% self-identified as black or brown, 44.4% as women, and 26.9% as LGBTQIA+ (lesbian, bisexual, gay, transgender, two-spirit, queer, questioning, intersex, asexual, nonbinary, gender nonconforming and non-heteronormative) and 61.3% of our employees in leadership positions self-identified as from underrepresented groups. At Nu, we want to be known not only for the revolution we started, but also for the way we started it. --- We were incorporated in the Cayman Islands as an exempted company with limited liability on February 26, 2016. Our principal executive offices are located at Floor 4, Willow House, Cricket Square, Grand Cayman, KY1-9010, Cayman Islands, and our telephone number at this address is +1 345 949 2648. Our website address is www.nubank.com.br.