Nubank (NU): Profitability, Cash Strength and Growth

Key takeaways — Q2 2025 establishes a new operating baseline#

Nubank’s most important recent development is clear and specific: the company’s Q2 2025 operating results show meaningful scale and sustained profitability, with revenue of $3.7 billion and net income of $637 million, figures management presented as evidence the business has moved from “growth at all costs” to a profitable regional banking franchise. That print—coupled with management’s emphasis on ARPAC expansion, deposits and the Mexico banking license—creates a new narrative where unit economics and cash generation are now central to valuation conversations rather than only user growth.

The Q2 2025 numbers are the headline, but the firm’s FY2024 audited performance gives context to the magnitude of the shift: FY2024 revenue of $11.10 billion and net income of $1.97 billion, which represent a +44.79% and +91.37% year‑over‑year expansion respectively versus FY2023. Those multi‑year moves—rapid top‑line growth together with expanding margins—explain why analysts are recalibrating forward EPS and multiple assumptions. (Q2 2025 and FY figures as reported by the company) Nu Holdings Q2 2025 and company filings.

What matters going forward is not only that Nubank is profitable, but the quality of that profitability. Cash flow from operations and free cash flow are positive and scaling: FY2024 free cash flow of $2.22 billion and operating cash flow of $2.40 billion, which gives the company both optionality and room to invest in market penetration, product expansion and gradual deposit gathering in Mexico and Colombia. These are not small numbers for a digital challenger bank in LatAm and they change the risk‑reward calculus for investors.

Financial performance and quality of earnings#

Nubank’s FY2024 income statement shows a material step change. Revenue increased to $11.10B from $7.67B in FY2023, a calculated YoY change of +44.79%, while net income rose to $1.97B from $1.03B, a YoY change of +91.37%. Those year‑over‑year growth rates are consistent with the company’s rapid scale of customers, higher ARPAC and expanding credit volumes reported across 2024 and into Q2 2025. (Source: company filings and Q2 release.)

Margin decomposition for FY2024 supports the claim that profitability is structural rather than episodic. Using the reported FY2024 figures, EBITDA of $2.87B on $11.10B revenue implies an EBITDA margin of 25.86%, operating income of $2.80B implies an operating margin of ~25.2%, and net income of $1.97B implies a net margin of ~17.8%. These margins reflect both higher‑value product mix (credit and interchange) and operating leverage: while the platform continues to invest in product and markets, incremental revenue is converting to profit at a meaningful rate.

Quality checks: cash flow performance supports reported profits. FY2024 operating cash flow was $2.40B and free cash flow $2.22B, which indicates net income is backed by real cash conversion rather than one‑time accounting effects. One item to watch is working capital: FY2024 shows a change in working capital of -$7.39B, a large negative movement largely aligned with deposit growth and balance sheet expansion; we discuss the funding implication below. (All figures from FY2024 financial statements.)

Income statement summary (FY2021–FY2024)#

*2022 EBITDA figure in the dataset appears as 35.27B, which is inconsistent with adjacent metrics and likely a data anomaly in the raw feed; other reported margins for 2022 (gross 34.66%, operating -6.84%) align with the revenue and operating income shown. Source for FY figures: company filings (FY2021–FY2024).

The table above underlines two points: first, a dramatic revenue acceleration across 2021–2024 (FY2021→FY2024 revenue CAGR ≈ 94.36%) and, second, a clear margin inflection from loss‑making operating results in 2021–2022 to sustained operating profitability in 2023–2024.

Balance sheet, liquidity and financial health — cash is a strategic advantage#

Nubank’s balance sheet at FY2024 is unambiguous on liquidity: cash & short‑term investments of $23.15B against total debt of $886.53M. If one computes net debt using a simple convention (total debt minus cash & short‑term investments), the calculated net debt is approximately -$22.26B (a large net cash position). The dataset also includes a reported netDebt figure of - $12.75B; this discrepancy suggests different definitional treatments (for example, regulatory deposits or certain funding liabilities may be outside the “total debt” field used in the simple calculation). We flag this difference and prioritize the raw balance sheet line items for transparency while noting reported netDebt for comparability to vendor metrics.

Current liquidity ratios calculated from the FY2024 balance sheet show a current ratio (total current assets / total current liabilities) of 37.19B / 38.90B = 0.96x. That ratio is below 1.0 on a simple current ratio basis, but standard banking liquidity metrics differ because many liabilities are deposits rather than short‑term borrowings, and deposits are core to operations and can be a low–cost funding source.

Share capital and market context: as of the latest quote in the dataset the share price was $14.64 and market capitalization ~$70.74B. Simple shares‑out calculation (market cap / price) implies ~4.83 billion shares outstanding; dividing FY2024 net income of $1.97B by that share count produces a back‑of‑envelope EPS of ~$0.41, which differs from reported per‑share metrics (reported EPS and TTM EPS closer to $0.47–$0.48) because of diluted share counts, different timing, and TTM definitions. For public‑facing valuation ratios, the data feed lists a trailing P/E around 30–31x (price / reported EPS) and forward P/E estimates in the data: 2025: 25.83x; 2026: 18.73x. (Market quote and valuation fields from the dataset.)

Balance sheet snapshot and computed ratios (FY2021–FY2024)#

These computed metrics underscore a consistent pattern: Nubank has built a sizable liquidity buffer over four years while scaling assets and liabilities rapidly. The negative net‑debt position is a strategic asset in a higher‑rate environment and enables deposit gathering and lending expansion without immediate need for external wholesale funding. (Source: FY2021–FY2024 filings.)

Growth drivers, monetization and unit economics#

Nubank’s growth engine remains a mix of user expansion and rising revenue per active customer. Management’s reported Q2 2025 operational metrics — ~123 million customers, ARPAC of $12.2 per active customer per month (Q2 2025), and activity rates >83% — support a monetization story where ARPAC increases materially as tenure and product penetration rise. Those Q2 figures are from the company’s Q2 2025 disclosure and investor materials. Nu Holdings Q2 2025

Credit expansion remains the principal near‑term engine of monetization. The platform’s credit portfolio expanded meaningfully (company disclosures point to credit portfolio growth and strong origination run‑rates in recent quarters). Credit yields and interchange income together drive gross profit per active customer, while a low incremental cost to serve (management cites ~$0.80 per active customer) means incremental ARPAC flows quickly to the bottom line. The FY2024 EBITDA margin of ~25.9% is the numerical expression of that operating leverage.

Embedded finance, SME products and deposit gathering in Mexico present the next leg of upside. With a full Mexican banking license received in 2025, the company can convert card‑centric relationships into deposit and payroll accounts — products that both lower funding costs and deepen primary relationships. Management’s Q2 commentary emphasizes payroll and deposit conversion as a priority in Mexico; the strategic lever is straightforward: turn customers into primary banking relationships, gather low‑cost deposits, and recycle deposits into higher‑margin lending and cross‑sell. Sources: company press releases and regional market disclosures.

Mexico, competition and moat durability#

Mexico represents both opportunity and a battleground. The license to operate as a full bank in Mexico materially expands the product set and gives Nubank the ability to pursue payroll flows and deposit gathering at scale. The company reports substantial customer penetration in Mexico (tens of millions of users) and rapid deposit growth in markets like Colombia, which shows management capability to convert digital engagement into balance‑sheet scale.

Competition is intense: incumbents such as BBVA and Itaú are investing heavily and ecosystem players such as Mercado Libre are scaling financial services across commerce and payments. Nubank’s durable advantages are its low cost‑to‑serve, product velocity and high engagement metrics; but those advantages rely on continued execution in underwriting, fraud control and regulatory compliance. In short, Nubank’s moat is real but contestable — it is strongest where an incumbent’s cost base is high and weakest where ecosystem players can bundle payments, credit and marketplace services.

Valuation context and analyst signals (what the market is re‑pricing)#

Market pricing in the dataset shows a market cap of ~$70.7B and a share price of $14.64. Trailing multiples are in the low 30s (trailing P/E ~31x on reported EPS), with forward P/E estimates falling to ~25.8x (2025) and ~18.7x (2026) per the supplied forward PE schedule. Analysts have revised targets and ratings upward after the recent prints; the market is effectively shifting to price faster earnings conversion and margin expansion into near‑term years.

Two valuation mechanics matter for investors: first, the multiple on current earnings (still elevated vs mature banks) reflects the premium for continued growth and secular deposit migration; second, Nubank’s strong free cash flow generation means discounted cash flow approaches will be particularly sensitive to assumptions about ARPAC trajectory, deposit conversion and credit performance. The dataset includes forward EV/EBITDA stepping down materially into the later years, reflecting large earnings growth embedded in analyst models.

Risks and key uncertainties#

Nubank’s path from scale to sustained long‑term returns is credible but not guaranteed. Principal risks include macroeconomic shocks in LatAm that can rapidy degrade credit performance, execution risk in converting Mexico customers into depositors and payroll accounts, and intensifying competition from incumbents and platform players that can compress interchange and cross‑sell economics. Operational risks—such as temporary originations interruptions highlighted in recent quarters—remain an execution watch item.

Data integrity and measurement differences are another area for scrutiny. As noted above, simple computations of net debt (total debt minus cash & short‑term investments) produce materially more conservative net debt figures than some vendor‑reported net debt metrics in the dataset. Likewise, reported TTM ratios (debt/equity, ROE) differ from simple FY computations; investors should reconcile vendor TTM measures with audited balance sheet line items and the company’s regulatory disclosures before drawing conclusions about leverage.

What this means for investors#

Nubank’s recent trajectory changes the investment question from “will it ever be profitable?” to “how fast and sustainably will it grow earnings and deposits?” The company now has three valuable, observable advantages: a large and engaged customer base (~100s of millions in LatAm), a cash‑rich balance sheet that can fund growth without immediate wholesale needs, and improving unit economics where incremental revenue drops to the bottom line thanks to low incremental costs.

Investors focused on outcomes should watch a handful of measurable KPIs over the next 12–24 months: ARPAC trajectory (can it move from mid‑teens to the company’s longer‑term targets through cross‑sell?), deposit growth and mix in Mexico (payroll conversions and average deposit balances), credit performance metrics (90+ day NPLs and provision coverage) and free cash flow conversion. Improvement on these fronts would make current forward multiples look more conservative; deterioration (macro or credit shocks) would expose valuation to multiple compression.

Conclusion — a matured growth story, not a settled one#

Nubank’s combination of high growth and positive operating cash flow is rare among global fintech challengers and deserves attention: FY2024 revenue of $11.10B and net income of $1.97B, plus Q2 2025 revenue of $3.7B and net income of $637M, show a platform that has scaled into meaningful profitability while keeping optionality to extend into deposits, payroll and SME finance through market licenses in Mexico and expansion in Colombia. The balance sheet is a competitive weapon: large cash buffers versus modest debt mean the company can pursue high‑ROI customer conversions without immediate wholesale funding pressure.

That said, the story is execution‑dependent. The metrics support a clear, data‑driven narrative: Nubank has moved the goalposts from “late‑stage growth” to “scalable, profitable regional bank.” The coming quarters will be decisive in showing whether ARPAC and deposit conversion translate into consistent margin expansion and sustained free cash flow growth under varying macro conditions.

Sources: company filings and Q2 2025 investor materials (Nu Holdings Q2 2025 press release and company financial statements), and the dataset provided above. Specific figures referenced throughout are drawn from the company’s FY2021–FY2024 filings and Q2 2025 release Nu Holdings Q2 2025.