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Nu Holdings (NYSE: NU) has reached a milestone that would have seemed almost impossible when it launched in 2013. The company just generated more than $1 billion in quarterly net income in the second quarter of 2026, up 49% year over year on a foreign-exchange-neutral basis. Revenue also climbed 39% to $5.9 billion.
While this milestone is important, investors shouldn't focus on the $1 billion figure alone. The more important thing is what this milestone tells us about the business and its future.
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For years, the Nu Holdings story was primarily about customer growth, and there was plenty of it. The company added roughly 4 million customers during Q2, bringing its total to 139 million across Brazil, Mexico, and Colombia.
But Nu Holdings is no longer simply adding customers and hoping they eventually become profitable. It is increasingly monetizing its existing customers. Monthly average revenue per active customer, or ARPAC, reached approximately $17 in Q2. That figure has been rising quarter after quarter, up from just $8 in the same period in 2022. This is an important development.
A digital bank becomes much more valuable when customers stop treating it as an extra financial app and start using it as their primary banking facility. Once that happens, Nu Holdings has more opportunities to earn revenue from the same customer. That is how customer growth can eventually turn into much larger earnings growth.
That brings us to the most important part of the $1 billion milestone. Nu Holdings doesn't necessarily need another 100 million customers to dramatically increase its profits. It can deepen its relationship with its existing 139 million customers.
Consider what happens if a customer who once used Nubank primarily for a credit card begins to keep their salary there, pay bills through the platform, hold savings, take a loan, and eventually use investment products. The customer count hasn't changed, but the economic value of that customer has.
Besides, ARPAC growth doesn't tell the whole story, since it's a mix of more mature markets like Brazil and newer markets like Mexico. As the latter market matures, the ARPAC will expand further.
In other words, Nu Holdings runs a business that gets better over time. More customers create a larger base to sell products to, while more products increase revenue per customer. Moreover, a larger revenue base can spread Nu Holdings' technology and operating costs across more customers.
$1 billion might be a milestone worth celebrating, but investors should not get carried away. A $1 billion quarterly profit doesn't automatically mean Nu Holdings can generate $4 billion every year indefinitely. Banking earnings can fluctuate, particularly when credit losses change.
For perspective, the 90-plus-day non-performing loans reached 6.9% in Q2, up from 5.8% in Q2 2023. However , this isn't a simple three-year upward trend. The ratio has fluctuated over time, and it reached around 7% in the third quarter of 2024 before declining.
That's an important distinction. The concern isn't that Nu Holdings' credit quality is suddenly deteriorating. Rather, investors need to watch whether the company can maintain its strong profitability as it takes on more credit risk and expands its balance sheet.
If Nu Holdings can continue growing its loan book, increasing revenue per customer, and maintaining strong credit discipline, its earnings power could continue expanding.
Nu Holdings' first $1 billion quarterly profit is an impressive milestone. But for long-term investors, the number itself isn't the investment thesis. The real opportunity lies in what comes next.
The bank now has 139 million customers, rising revenue per customer, and a rapidly growing financial ecosystem. If it can continue deepening relationships while maintaining credit discipline, today's $1 billion quarterly profit could eventually look like the beginning, rather than the end, of its earnings story.
The most important thing is whether the company can sustain and compound its profitability as it becomes a much larger bank. That's what investors should watch going forward.
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Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nu Holdings. The Motley Fool has a disclosure policy.
Nu Holdings Crossed a $1 Billion Quarterly Profit Milestone. Here's Why It Matters. was originally published by The Motley Fool
