With the end of the lock-up on Nubank (NU) shares on Tuesday May 17, CEO David Vélez said in a meeting with investors that he was “happy to announce” that the majority of the fintech’s shareholders had reinforced their long-term investor position. “Most shareholders do not intend to sell the shares with the end of the lock-up, showing that Nubank is a long-term opportunity,” he said.
When Nubank made the IPO, a huge amount of shares was not sold, as there are shareholders of the company -- first employees who hold stakes, for example -- who could not market their shares soon after going public. They had to wait for a certain period. This lock-up period ends this Tuesday (17) when up to $26 billion in shares could be released for trading.
On Monday, Nubank reported an adjusted net income of $10.1 million in the first quarter of 2022, reversing the net loss of US$ 11.9 million in the same period last year.
The fintech had a record total revenue of $877.2 million in the first quarter, a 226% growth in neutral currency compared to the first quarter of 2021, beating Bloomberg average analysts estimate of $630.9 million.
The company said it grew the number of customers in Brazil by 55% compared to the same period last year, reaching 59.6 million users. The small and medium business customer base grew 167% compared to the first quarter of 2021, reaching 1.6 million as of March 31, 2022.
Recently, Nubank secured a syndicated line of credit worth $650 million to invest in Mexico and Colombia and expand its business. Currently, the digital bank, operating in these markets as Nu, has 2.1 million customers in Mexico and 211,000 in the South American country.
Due to volatility and pressure with the end of the stock lock-up on May 17, Nubank lost more than a third of its market value less than five months after IPO.
Credit, money for tech companies that are big on cash, is getting more expensive. It is more expensive to finance a company that does not make substantial short-term profits.
Nubank grew its loan portfolio to $8.8 billion, “maintaining healthy credit levels,” said Vélez, at an investor conference after the results were released.
Highlights of the investors call
- Nubank expects that as the credit portfolio grows, margins should increase
- The fintech said it was created in the midst of recessions in Brazil and knows how to navigate these cycles
- The company said it is capitalized enough to continue expanding the ecosystem, including through M&As
- Mexico is beating Brazil in NPS (net promoting score) metrics. There is greater NPL (non-performing loans) in the country than in Brazil, since, according to Nubank, Mexico has 12% of the population with credit, indicating greater “consumer pain”. Most Nubank users in Mexico arrive through organic referrals
- Vélez said he is confident with the resilience of Nubank’s credit originations in this period of volatility
(Updates with investors’ call information)