Nu shares slump on Q4 results, a canary to still-private fintechs

Nu, parent to the well-known Latin American neobank Nubank, reported its fourth-quarter and 2021 financial performance yesterday evening to the apparent disappointment of investors.

Since its flotation last year in a large offering, shares of Nu have depreciated from a high north of $12 per share – the company is listed on the New York Stock Exchange and a local bourse – to just under $9 per share before it reported its results. In early-morning trading today, Nu’s shares rose in the wake of the company’s earnings report, but when regular trading began, the company slouched to a loss of around 9%.

Despite recent declines, Nu is still worth nearly $37 billion as of this morning, per Yahoo Finance data.

For the burgeoning neobanking sector, which has seen myriad startups around the world raise huge sums of money to build consumer-friendly digital banking services, Nu’s IPO was a critical moment. It provided an early answer to the question of how the value of yet-private neobanks would convert to the public markets.

Despite early issues, investors seem cheered by what the company detailed in its fourth quarter. Let’s talk through the results and then discuss what they – and the resulting investor response – mean for Chime and other neobanks on the cusp of pursuing their own public offerings.


Nu generated revenues of $635.97 million in Q4 2021, up from $202.57 million in the year-ago quarter. Per Nu, its revenue grew 224.3% year on year on a forex-neutral basis in the final quarter of 2021. That’s quick.

The company’s revenue stems from two main buckets. In its most recent three-month period, the company’s interest-derived income came to $439.55 million, while the top-line from “fee and commission income” totaled $196.42 million.

The company’s revenue has three core costs: interest expenses, transaction expenses and credit losses. In sum, those costs came to $409.08 million in the quarter, leaving Nu with gross profit of $226.89 million in the fourth quarter.

Inclusive of all costs, Nu lost $88.5 million before the impact of taxes in the fourth quarter. However, if you are more into adjusted metrics, we have those as well. Nu’s reported adjusted net income was $3.2 million for the quarter and $6.6 million for 2021, its first full-year adjusted net income result in its history.

But enough of the dull normal metrics. Nu is a fintech company, so we want to understand how the mechanics of its business are working, right?

Fintech metrics

Nu’s pitch to investors is simple: It is adding users (active customers), which generate rising revenue on an individual basis (average revenue per active customer, or ARPAC), which, combined with falling support costs (“cost to serve,” in the company’s phrasing), will lead to eventual profits as far as the eye can see.

So let’s talk about those metrics. Nu added 5.8 million customers in Q4 2021, leaving it with just under 54 million in total. How active were those users? In ARPAC terms, customers were worth $5.6 apiece in the fourth quarter of 2021, up from $3.3 in the same portion of 2020.

Thus far we have more customers and more revenue per customer, right? That’s the formula for the company’s rapid growth from Q4 2020 to Q4 2021; flat ARPAC and linear customer adds would be a fine business, while rising ARPAC and linear customer adds is compounding.

The final portion of the Nu financial calculation – users multiplied by per-user revenue minus customer support costs – is monthly average cost to serve per active customer, our new favorite phrase. It acronymizes to MACTSPAC. Hell yeah. Anyway, that number fell 20.4% to $0.90 in the fourth quarter of 2021 on a forex-neutral basis.

The company is therefore doing what it said it was going to do — and doing it pretty well, by our read. Why is it suffering in the stock market? Generally speaking, the value of fintech companies has slumped since pandemic-era highs. Block, the company known as Square until a recent rebrand, has seen its value fall from a 52-week high of $289.23 per share to just $90.75 today as of the time of writing, for example.

It appears that Nu is struggling under the weight of its IPO valuation, loosely, as the price investors will pay for fintech revenues falls.

When it comes to the private markets, it felt like there was a period of time that saw digital banks raising venture money left and right. But in recent months, that has slowed – perhaps partly in response to Nu’s early public performance. Investors are likely proceeding more cautiously and taking a “wait and see” approach.