Nu Holdings Ltd.

Company Overview

Business Model: Nu Holdings Ltd. operates as a digital financial services platform, aiming to simplify financial products and empower individuals across Latin America. Its core value proposition is providing accessible, affordable, and easy-to-use financial services. Revenue is primarily generated from interest income and gains (losses) on financial instruments (83.6% of total revenue in 2024) and fee and commission income (16.4% in 2024), including interchange fees, late fees, and commissions from partners. The business model is built on a customer-centric culture, human-centric design, advanced proprietary technologies, and data science.

Market Position: Nu Holdings Ltd. is one of the world’s largest digital financial services platforms, serving 114.2 million customers across Brazil, Mexico, and Colombia as of December 31, 2024, with nearly 95 million active. In Brazil, it is the third-largest financial institution by customer count (BCB data, 2024), with customer growth surpassing the five largest incumbent banks combined. In Mexico, Nu is the leading credit card issuer based on net cards issued (Jan-Oct 2024, CNBV data), with 5.6 million credit card customers. In Colombia, deposits reached US$1.3 billion, positioning Nu among the top five financial institutions for individual demand deposits and as the 4th largest savings account provider for individuals (Dec 2024, Superintendencia Financiera). Competitive advantages include a low Customer Acquisition Cost (CAC) of approximately US$6.42 per customer in 2024, with 80-90% of customers acquired organically, and a cost to serve and general and administrative expenses per active customer in Brazil estimated to be 85% lower than incumbents. The company leverages its proprietary NuX credit engine, utilizing over 30,000 data points per monthly active customer and 60+ machine learning algorithms for superior credit underwriting.

Recent Strategic Developments: Nu Holdings Ltd. has a history of rapid product expansion and international growth. Key developments include:

• 2014-2019: Launched Nu Credit Card and NuAccount in Brazil, followed by personal loans and business checking accounts. Initiated international expansion to Mexico and Colombia with credit card products.
• 2020-2021: Introduced NuLife (life insurance) in partnership with Chubb Limited, acquired Easynvest (rebranded as Nu Investimentos), launched Ultraviolet (premium credit card), and went public on NYSE, raising US$2.3 billion.
• 2022-2023: Launched NuPay (online payment solution), Money Boxes (digital savings), expanded loan products in Brazil (secured payroll, FGTS-backed, investment-backed), and launched checking accounts and personal loans in Mexico.
• 2024: Exceeded 100 million customers in Brazil, serving 58% of the population. Expanded public-sector payroll loans, launched Working Capital for SMEs, introduced Nubank+ (cashback, streaming, free withdrawals), NuTravel (travel booking with Multi-Currency Account via Wise), and NuCel (MVNO service with Claro). Acquired Hyperplane (U.S. AI platform) and made a minority investment in Tyme Group Pte Ltd. (Singapore). Repositioned Nucoin as a loyalty program, discontinuing its liquidity pool feature. Nu Colombia Compañía de Financiamiento secured a 3-year, US$150.0 million credit facility with United States International Development Finance (DFC).

Geographic Footprint: Nu Holdings Ltd. primarily operates in Brazil, Mexico, and Colombia. It also maintains information technology and business support operations in Uruguay and the United States.

• Brazil: 101.8 million customers (Dec 31, 2024). Regulated subsidiaries include Nu Pagamentos S.A. – Instituição de Pagamento, Nu Financeira S.A. – Sociedade de Crédito, Financiamento e Investimento, Nu Investimentos S.A. - Corretora de Títulos e Valores Mobiliários, NuPay for Business Instituição de Pagamento Ltda., Nu Asset Management Ltda., and Nu Corretora de Seguros Ltda. None are licensed as a bank.
• Mexico: 10 million customers (2024). Nu México Financiera, S.A. de C.V., S.F.P. is a regulated financial institution (Sofipo) authorized to receive deposits and grant loans. Nu applied for a banking license in October 2023.
• Colombia: 2.5 million customers (2024). Nu Colombia Compañía de Financiamiento is a regulated financial institution (SFC) since January 2024.

Cross-Border Operations: The company's group consists of 40 entities, with 16 subsidiaries in Brazil and others in Mexico, Colombia, Uruguay, and the United States. Nu Holdings Ltd. holds an 18% equity interest in Tyme Group Pte Ltd. (Singapore), equivalent to a 10% indirect equity interest in Tyme Group, with Series D preferred shares convertible into voting shares at Nu's election. The company has non-exclusive license agreements with Mastercard International Incorporated for Brazil, Mexico, and Colombia.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 45.6% (2024) vs. 43.5% (2023)
• Operating Margin: 24.3% (2024) vs. 19.2% (2023)
• Net Margin: 17.1% (2024) vs. 12.8% (2023)

Investment in Growth:

• R&D Expenditure: Included within General and administrative expenses.
• Capital Expenditures: $174.9 million (2024)
• Strategic Investments: Acquired Hyperplane (U.S. AI platform) in July 2024; made a minority investment in Tyme Group Pte Ltd. (Singapore) in December 2024.

Currency Impact Analysis: Nu Holdings Ltd.'s presentation and functional currency is the U.S. dollar, while its operating entities in Brazil, Mexico, and Colombia use Brazilian real, Mexican peso, and Colombian peso as their functional currencies, respectively. Approximately 24% of costs in 2024 were directly or indirectly linked to the U.S. dollar, while the majority of revenue was denominated in Brazilian reais. The Brazilian real depreciated 27.9% against the U.S. dollar in 2024, which adversely affected U.S. dollar results. The company uses derivatives to hedge exposure to market, credit, and operational risks, with Brazilian subsidiaries hedging U.S. dollar and Euro costs and intercompany loans with futures contracts. Nu Holdings Ltd. does not hedge FX exposure from its investments in Brazil, Colombia, and Mexico, leading to translation gains/losses in Other Comprehensive Income.

Business Segment Analysis

Nu Holdings Ltd.'s Chief Operating Decision Maker (CEO) reviews the consolidated statement of income and comprehensive income, considering the entire Group as a single operating and reportable segment. The company's performance is driven by its diverse product portfolio across its key markets.

Payments

Financial Performance:

• Purchase Volume (PV): US$125.6 billion (+36% YoY FX Neutral) in 2024.
• Key Growth Drivers: Strong adoption of Pix in Brazil, credit card market share gains in Brazil and Mexico, and expansion of digital payment solutions. Product Portfolio:
• Major product lines: Nu Credit Card, NuAccount, Pix (instant payment system), NuPay (online payment solution), NuMarketplace, NuTravel (travel booking), and NuCel (MVNO service).
• New product launches: NuPay, NuMarketplace, NuTravel, and NuCel in 2024. Market Dynamics:
• Brazil (Pix): 163 million unique users in 2024 (77% of population), with total transaction volumes of US$4.9 trillion in 2024 (+54% FX-neutral increase). Nu's market share in transfers originations is close to 20%.
• Brazil (Cards): Over 60 million unique credit card customers (34% of population aged 14+). Nu's market share in total card transaction volumes was 15% in 2024, up from 14.2% in 2024 (ABECS data).
• Mexico (Cards): 5.6 million credit card customers in 2024 (+70% growth over 2023), with market share in purchase volume exceeding 5%.
• Colombia (Cards): Customer base grew from ~800,000 (Dec 2023) to over 1.2 million (Dec 2024). Geographic Revenue Distribution: Payments revenue is integrated into overall geographic revenue, with Brazil being the largest contributor.

Retail Credit for Individuals

Financial Performance:

• NPL Ratio: Nu's 90-day consumer finance delinquency rate (NPL ratio) was 7.0% as of December 2024.
• Key Growth Drivers: Expansion of personal loan offerings and introduction of secured loan products. Product Portfolio:
• Major product lines: Personal loans, secured payroll loans (for federal public employees, INSS beneficiaries), FGTS-backed loans, and investment-backed loans.
• New product launches: Payroll loans (April 2023) and FGTS-backed loans (Sept 2023) in Brazil; personal loans in Mexico (2023) and Colombia (2024). Market Dynamics:
• Brazil: Nu had 24% market share in unsecured personal loan originations in 2024, with 10% of the outstanding balance. FGTS-backed loans represented over 10% of new consumer loan originations in 2024.
• Mexico & Colombia: Launched personal loans in 2023 and 2024, respectively, contributing to average outstanding loans of US$162 billion and US$73 billion in 2024 for these markets.

Credit to SMEs

Financial Performance:

• Key Growth Drivers: Significant increase in SME customer base. Product Portfolio:
• Major product lines: PJ account (business checking accounts) and Working Capital for SMEs.
• New product launches: Working Capital for SMEs in 2024. Market Dynamics:
• Brazil: Nu's PJ account served 4.7 million SME customers (Dec 2024), a 31% increase year-over-year, positioning it among the five largest MSE players.

Customer Assets

Financial Performance:

• Total customer deposits: US$28.9 billion (Dec 31, 2024), a 12% FX-neutral increase YoY.
• Market Share: Nu's market share in individual deposits and retail investor assets was 3.3% (Dec 31, 2024), up from 3.0% (Dec 31, 2023). Product Portfolio:
• Major product lines: NuAccount, Cuenta Nu (digital savings account), and Money Boxes (digital savings platform). Market Dynamics:
• Brazil: 199 million unique customers with accounts (Dec 31, 2024), with over 47% having an active account. Approximately 90% of Brazilian customers had deposits or Money Boxes.
• Mexico: Cuenta Nu reached over 8 million customers as of Dec 2024, within one month of its May 2023 launch.
• Colombia: Cuenta Nu reached almost 2 million account holders within one year of its early 2024 launch, with deposits reaching US$1.3 billion.

Insurance Brokerage

Financial Performance:

• Active Policies: Over 2 million active policies across all insurance categories as of Dec 2024 (+60% annual growth rate). Product Portfolio:
• Major product lines: NuLife (life insurance) and other insurance categories. Market Dynamics:
• Brazil: The Brazilian insurance sector's Gross Written Premiums (GWP) totaled US$73 billion in 2024.

E-Commerce Marketplaces

Financial Performance:

• Marketplace Customers: NuMarketplace surpassed 1.0 million customers in 2024. Product Portfolio:
• Major product lines: In-app marketplace. Market Dynamics:
• Brazil: Brazilian e-commerce GMV was almost US$38 billion in 2024.

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure: Nu Holdings Ltd. operates through a network of 39 subsidiaries, including 16 in Brazil, and others in Mexico, Colombia, Uruguay, and the United States.

• Subsidiaries: Key regulated subsidiaries include Nu México Financiera, S.A. de C.V., S.F.P. (Mexico) and Nu Colombia Compañía de Financiamiento (Colombia), both authorized financial institutions.
• Joint Ventures: The company holds an 18% equity interest in Tyme Group Pte Ltd. (Singapore), which is the holding company for Tyme Bank Holdings (South Africa) and Tyme Investments (Southeast Asia).
• Licensing Agreements: Nu Holdings Ltd. maintains non-exclusive license agreements with Mastercard International Incorporated for its operations in Brazil, Mexico, and Colombia.

Cross-Border Trade: While specific export/import dependencies are not detailed, the company's operations involve cross-border technology and business support from Uruguay and the United States. Transfer pricing is a consideration for inter-company transactions across jurisdictions.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No shares were repurchased in 2024. In 2023, 290,676 shares were repurchased.
• Dividend Payments: Nu Holdings Ltd. has never declared or paid cash dividends and intends to retain future earnings for business growth.
• Future Capital Return Commitments: Not disclosed.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $9.186 billion
• Total Debt: $1.757 billion (comprising $1.730 billion in borrowings and financing and $26.2 million in lease liabilities)
• Net Cash Position: $7.429 billion
• Credit Rating: Not disclosed.
• Debt Maturity Profile: As of December 31, 2024, borrowings and financing maturities include $6.7 million due in up to 3 months, $407.6 million due in 3 to 12 months, and $1.316 billion due over 12 months. Key debt instruments include syndicated loans (COP and USD denominated), financial letters (BRL denominated), and a margin loan credit facility (USD denominated).

Cash Flow Generation:

• Operating Cash Flow: $2.399 billion (2024)
• Free Cash Flow: $2.224 billion (2024)
• Cash Conversion Metrics: Not explicitly detailed, but the company's strong operating cash flow generation supports its growth initiatives.

Currency Management: The company's cash and equivalents are held across various currencies, primarily Brazilian reais, Mexican pesos, and Colombian pesos, reflecting its operational footprint. While the company does not hedge FX exposure from its net investments in foreign subsidiaries, Brazilian subsidiaries may use futures contracts to hedge U.S. dollar and Euro costs and intercompany loans. Financial hedging instruments, such as interest rate contracts (futures, swaps), foreign currency exchange rate contracts (futures, non-deliverable forwards), warrants, and call options, are used to manage market, currency, and interest rate risks.

Operational Excellence

Production & Service Model: Nu Holdings Ltd. operates an all-digital, cloud-based model, leveraging its proprietary cloud-based core banking platform (NuCore) and a microservices architecture with over 1,800 modular microservices. The company employs an immutable ledger using Datomic database technology and primarily relies on Amazon Web Services for its cloud infrastructure. This model enables scalability, efficiency, and rapid product development.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Cloud Infrastructure: Amazon Web Services - primary cloud provider, critical for all digital operations.
• Payment Networks: Mastercard International Incorporated - non-exclusive license agreements for credit and debit card operations across Brazil, Mexico, and Colombia.
• Mobile Network: Claro - MVNO partnership for NuCel mobile phone service in Brazil.
• Insurance: Chubb Limited - partnership for NuLife life insurance in Brazil.
• Travel: Wise - partnership for Multi-Currency Account in NuTravel.

Facility Network:

• Manufacturing: Not applicable as a digital financial services provider.
• Research & Development: Main R&D efforts are integrated into its technology teams across its operational footprint. The company acquired Hyperplane (U.S. AI platform) in July 2024 and Olivia (U.S. and Brazil, ML/AI for retail banking) in January 2022 to accelerate AI development.
• Distribution: Main operational headquarters in São Paulo, Brazil (111,912 sq ft, lease expires Sept 2028). Total leased office space across Brazil, Mexico, Colombia, Uruguay, and the US is 382,485 sq ft. Data center services are provided by third-parties in São Paulo, Brazil, and the United States.

Operational Metrics:

• Customer Acquisition Cost (CAC): US$6.42 per customer in 2024, with 80-90% of new customers acquired organically.
• Cost to Serve: Monthly average cost to serve per active customer was US$0.8 in 2024. Nu's cost to serve and general and administrative expenses per active customer in Brazil are approximately 85% lower than incumbents.
• Employees per Customer: Approximately 13,400 customers per employee as of December 2024.
• Net Churn: Averaged 0.2% per month in 2024, stable compared to 2023.
• Customer Engagement: Daily active customers/monthly active customers was 56.8% in December 2024 for Brazilian customers.

Market Access & Customer Relationships

Go-to-Market Strategy: Nu Holdings Ltd. primarily relies on organic word-of-mouth and direct unpaid referrals, acquiring 80-90% of new customers organically each year. This strategy is supported by:

• Financial Education Content: Proprietary blog with 47 million unique visitors in 2024 and InvestNews with 17.5 million unique visitors in 2024.
• Social Media Engagement: Over 1,500 posts in 2024 and 15 million followers.
• Digital Platforms: Online sales channels and in-app product offerings are central to its customer acquisition and engagement.

Customer Portfolio:

• Enterprise Customers: Not explicitly detailed, but the company focuses on individual consumers and small and medium-sized enterprises (SMEs).
• Strategic Partnerships: Partnerships with companies like Chubb Limited (insurance), Wise (travel), and Claro (mobile services) expand its ecosystem and customer offerings.
• Customer Concentration: No single customer represented 10% or more of its revenues for the years ended December 31, 2024, 2023, and 2022, indicating a diversified customer base.

Regional Market Penetration:

• Brazil: Over 100 million customers, serving 58% of the population. Nu's share of the Brazilian card Purchase Volume (PV) market was 14.2% in 2024. Over 61% of active customers with Nu for more than 12 months had a primary banking relationship as of December 31, 2024.
• Mexico: 10 million customers, leading credit card issuer based on net cards issued (Jan-Oct 2024, CNBV data), with over 5% market share in purchase volume.
• Colombia: 2.5 million customers, 4th largest savings account provider for individuals (Dec 2024, Superintendencia Financiera).
• Growth Markets: The company continues to expand its product offerings and customer base in Mexico and Colombia, which are considered key growth markets.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The Latin American market presents significant growth opportunities, with a GDP of US$6.7 trillion in 2024 and projected 2.1% real growth. The region exhibits low credit card adoption rates (52% Brazil, 10.5% Mexico, 22.2% Colombia) and limited household debt as a percentage of GDP compared to developed markets, indicating substantial room for financial services penetration. Digital banks' share of outstanding loans to individuals in Brazil increased from less than 1% in 2018 to over 6% in September 2024, highlighting the shift towards digital financial services. The banking sector concentration, as measured by the Herfindahl–Hirschman Index (HHI), is significantly higher in Brazil (883), Mexico (1,008), and Colombia (1,243) compared to the US (350), Germany (323), and France (567), suggesting a less competitive landscape that Nu Holdings Ltd. is disrupting.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Brazilian Consumer Credit: Itaú Unibanco S.A., Banco Bradesco S.A., Banco Santander (Brasil) S.A., Banco Caixa Econômica Federal, Banco do Brasil S.A.
• Brazilian Investment: Banco BTG Pactual S.A., Banco Inter S.A., Banco C6 S.A., XP Inc.
• Brazilian Payments: MercadoPago Instituição de Pagamento Ltda., PicPay Instituição de Pagamento S.A., PagSeguro Digital Ltd., StoneCo Ltd.

Regional Competitive Dynamics: The competitive landscape varies by country. In Brazil, Nu Holdings Ltd. competes with large incumbent banks and other digital players across credit, payments, and investments. In Mexico and Colombia, the company is rapidly gaining market share, particularly in credit cards and digital savings accounts, challenging established financial institutions. The high banking sector concentration in these markets suggests opportunities for digital disruptors like Nu Holdings Ltd. to capture market share by offering more accessible and user-friendly services.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics: The company is exposed to macroeconomic conditions in Brazil, Mexico, and Colombia, including real GDP growth, inflation, and interest rate fluctuations. Weak macroeconomic conditions are expected through 2025. Higher interest rates can reduce fees but increase interest income, while inflation impacts supplier obligations and consumer purchasing power. Technology Disruption: The business is highly dependent on its IT systems and third-party data centers/cloud platforms (primarily Amazon Web Services). Any disruption could impair services, and cybersecurity breaches pose risks of liability, litigation, and reputational damage. Customer Concentration: No single customer represents 10% or more of the company's revenues, mitigating customer concentration risk.

Operational & Execution Risks

Global Supply Chain Vulnerabilities: Heavy reliance on third-party providers for data security and cloud infrastructure introduces vulnerabilities. Disruptions to these services could compromise systems and operations. Regional Disruptions: Operations are subject to political and economic instability, as well as natural disaster risks in Brazil, Mexico, and Colombia.

Financial & Regulatory Risks

Currency & Financial Risks:

• Foreign Exchange: Significant exposure to Brazilian real, Mexican peso, and Colombian peso fluctuations against the U.S. dollar, which can lead to translation gains/losses. Approximately 24% of costs are linked to the U.S. dollar.
• Interest Rate Risk: Exposure arises from credit card, personal loans, cash management, and funding activities, with sensitivities to local risk-free curves (e.g., Brazilian CDI, Mexican TIIE, Colombian IBR).
• Credit & Liquidity: Credit risk from counterparty failure on loans and credit cards, and liquidity risk from the ability to meet obligations efficiently. The company monitors liquidity daily and maintains a Contingency Funding Plan. Regulatory & Compliance Risks:
• Multi-Jurisdictional Compliance: Subject to extensive and evolving financial regulations in Brazil (BCB, CVM, CMN, SUSEP), Mexico (CNBV, Condusef, Banxico), and Colombia (SFC).
• Trade Regulations: Not explicitly detailed, but general trade restrictions could impact operations.
• Tax Regulations: Subject to varying corporate income tax rates (Brazil 40%, Mexico 30%, Colombia 35%) and other taxes. Brazil enacted a new VAT system (Supplementary Law No. 214/2025, effective Jan 2027), and OECD/G20 Pillar II rules (15% global minimum tax) are effective Jan 1, 2025.

Geopolitical & External Risks

Country-Specific Risks:

• Political Risk: Political instability and policy changes in operating countries can materially affect business.
• Economic Risk: Exchange rate and interest rate instability (e.g., Brazilian real depreciation, high Selic rate, Colombian CPI) and economic downturns can impact financial performance. Brazil's credit rating is below investment grade.
• Regulatory Changes: Recent regulatory changes in Brazil (credit card interest limits), Mexico (credit card statement format, TIIE replacement), and Colombia (Immediate Payments System development) require continuous adaptation and compliance.

Innovation & Technology Leadership

Research & Development Focus: Nu Holdings Ltd. maintains a strong focus on innovation, leveraging advanced proprietary technologies and data science.

• Global R&D Network: R&D efforts are integrated across its operational footprint. The company acquired Hyperplane (U.S. AI platform) in July 2024 to accelerate AI development and Olivia (U.S. and Brazil, ML/AI for retail banking) in January 2022.
• Innovation Pipeline: The company continuously develops new products and features, including NuTravel (travel booking), NuCel (MVNO service), and expanding secured loan products and loan offerings in Mexico and Colombia. Earliest customer cohorts have adopted approximately four products.

Intellectual Property Portfolio:

• Patent Strategy: Owns a patent for its Ultraviolet card feature (granted by USPTO on January 25, 2022) and has a pending patent application for NuTap (filed May 11, 2022).
• Licensing Programs: Not explicitly detailed for revenue generation, but the company relies on licensed intellectual property and technology from third parties.
• IP Litigation: The company is exposed to claims of intellectual property infringement by third parties, which could result in costly litigation.

Technology Partnerships:

• Strategic Alliances: Collaborates with partners such as Chubb Limited for insurance products, Wise for multi-currency accounts, and Claro for mobile virtual network operator (MVNO) services.
• Research Collaborations: Not explicitly detailed, but the company's acquisitions of AI platforms suggest a focus on integrating advanced technologies.

Leadership & Governance

Executive Leadership Team

International Management Structure: The company has a regional leadership structure, including a Brazil Chief Executive Officer, Livia Martines Chanes. The overall management structure balances local management autonomy with centralized oversight.

Board Composition: As of December 31, 2024, the board of directors had eight members. The company is a "controlled company" under NYSE listing standards, with David Vélez Osorno, the founding shareholder, chairman, and CEO, owning 88.6% of Class B ordinary shares, representing 75.2% of total voting power. This allows the company to rely on exemptions from certain corporate governance requirements, such as having a majority of independent directors or fully independent compensation and nominating committees. The board includes independent directors such as Anita Mary Sands (Lead Independent Director) and Rogério Paulo Calderón Peres (Chair of Audit and Risk Committee and audit committee financial expert). The company's Memorandum and Articles of Association and Shareholder’s Agreement contain anti-takeover provisions, and David Vélez Osorno has significant rights regarding director nominations and approval of material strategic actions.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Nu Holdings Ltd. operates under extensive regulatory frameworks in its primary markets:

• Brazil: Subsidiaries are regulated by the Central Bank of Brazil (BCB), the Brazilian Securities and Exchange Commission (CVM), and the National Monetary Council (CMN). Nu Corretora de Seguros Ltda. is regulated by the Superintendence of Private Insurance (SUSEP).
• Mexico: Nu México Financiera, S.A. de C.V., S.F.P. is regulated by the National Banking and Securities Commission (CNBV), the National Commission for the Protection and Defense of Financial Services Users (Condusef), and the Bank of Mexico (Banxico).
• Colombia: Nu Colombia Compañía de Financiamiento is regulated by the Superintendencia Financiera de Colombia (SFC).

Cross-Border Compliance: The company's Compliance program includes an Ethics Program (covering anti-bribery, conflict of interest, insider trading) and a Regulatory Compliance team that monitors regulatory changes, assesses new products, and manages regulator relationships. Its Anti Money Laundering (AML) Program is a global framework with seven pillars, including Enterprise Risk Assessment, Know Your Customer (KYC), and monitoring.

International Tax Strategy:

• Transfer Pricing: Transfer pricing policies are in place for inter-company transactions, which are subject to scrutiny by tax authorities in multiple jurisdictions.
• Tax Treaties: Not explicitly detailed, but the company's international operations benefit from tax treaties to avoid double taxation.
• BEPS Compliance: The OECD/G20 Pillar II rules, introducing a 15% global minimum tax, are effective January 1, 2025. The company does not anticipate this to materially impact its tax burden as Brazilian entities have statutory rates of at least 30%. Brazil's VAT reform (Complementary Law 214/25, effective Jan 1, 2027) will introduce a new VAT system, subjecting Nubank entities to a special regime.

Environmental & Social Impact

Global Sustainability Strategy: Nu Holdings Ltd. is subject to evolving sustainability regulations in its operating jurisdictions.

• Environmental Commitments: Brazilian regulations, such as BCB Resolution 265/22 and CMN Resolution No. 4,945, require integrated risk management for financial conglomerates, including social, environmental, and climate risks.
• Carbon Neutrality: Not explicitly detailed.
• Renewable Energy: Not explicitly detailed.

Regional Sustainability Initiatives:

• Regulatory Compliance: The company is preparing for new sustainability reporting mandates, with CMN Resolution No. 5,185 and BCB Resolution 435 (Nov 2024) requiring sustainability reporting aligned with ISSB's IFRS S1/S2 for larger financial/payment institutions, with disclosure obligations starting in 2026.
• Supply Chain: Global supplier ESG requirements and sustainability standards are not explicitly detailed in the filing.

Social Impact by Region:

• Community Investment: Not explicitly detailed.
• Labor Standards: The company maintains a Code of Conduct and Whistleblower Policy for all employees, officers, and directors, promoting ethical conduct and legal compliance.

Currency Management & Financial Strategy

Multi-Currency Operations: Nu Holdings Ltd. operates in multiple currencies, with its functional currency being the U.S. dollar, while its operating entities primarily transact in Brazilian reais, Mexican pesos, and Colombian pesos. Currency Exposure:

Hedging Strategies:

• Transaction Hedging: The company uses foreign currency exchange rate contracts (futures, non-deliverable forwards) to hedge foreign currency risk on forecasted transaction expenses, such as cloud infrastructure, software licenses, and intercompany expenses.
• Translation Hedging: Nu Holdings Ltd. does not hedge the foreign exchange exposure from its net investments in Brazil, Colombia, and Mexico, leading to translation gains/losses recognized in Other Comprehensive Income.
• Economic Hedging: Not explicitly detailed, but operational diversification across Latin America provides a natural hedge against country-specific economic downturns. The company also uses Total Return Swaps (TRS) to hedge future cash disbursements for corporate and social security taxes at RSU vesting from share price volatility.