Nu Holdings Ltd.

Good afternoon, ladies and gentlemen. Welcome to New Holdings Conference Call to discuss the results for the first quarter of 2023. A slide presentation is accompanying today's webcast, which is available in New's Investors Relations website, www.investors.new in English and www.investidores.com. This conference has been recorded and the replay can also be accessed on the company's IR website. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select Mute Original Audio. Please be advised that all participants will be in listen-only mode. You may submit online questions at any time today. using the Q&A box on the webcast. I would now like to turn the call over to Mr. Jorg Friedman, Investor Relations Officer at New Holdings. Mr. Friedman, you may proceed.

Thank you very much, operator, and thank you all for joining our earnings call today. If you have not seen our earnings release, a copy is posted in the results center section of our investor relations website. With me on today's call are David Ellis, our founder, chief executive officer and chairman, Youssef Larache, our president and chief operating officer, and Guilherme Lago, our chief financial officer. Throughout this conference call, we will be presenting known IFRS financial information, including adjusted net income. These are important financial measures for the company, but are not financial measures as defined by IFRS. Reconciliations of the company's known IFRS financial information to the IFRS financial information are available in our earnings press release. unless noted otherwise, all growth rates are on a year-over-year, FX-neutral basis. I would also like to remind everyone that today's discussion might include forward-looking statements, which are not guarantees of future performance and, therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties and could cause actual results to differ materially from the company's expectations. Please refer to the forward-looking statements disclosure in the company's earnings press release. Today, our founder, chairman, and CEO, David Vélez, will discuss the main highlights of our first quarter 2023 results and provide an overview of our Brazilian operations. Subsequently, Guilherme Lago, our CFO, and Youssef Larache, our president and COO, will take you through our financial and operating performance for the quarter. after which time we will be happy to take your questions. Now, I would like to turn the call over to Davi. Davi, please go ahead.

Thank you, Jorg. Good evening, everyone, and thank you for being with us today. Once again, in a quarter marked by general concerns about economic activity and asset quality in the markets we operate, the soundness of effectively all our financial indicators remained very strong, attesting to the resilience of our business model and the execution of our team. As I will show in the next few slides, we continue to deliver a rare combination of strong growth and increasing profitability through the ups and downs of our markets. In the first quarter, our numbers continue to demonstrate the compounded effect of our platform's high growth, combined with increasing profitability provided by our business model. Revenue surpassed $1.6 billion, expanding 87% year over year. Our gross profit reached $651 million, 124% year-over-year increase. And our gross margin, again, surpassed the 40% threshold this quarter, reaching the highest level since 2021. Discontinued revenue growth with gross margin expansion enabled a significant increase in net income, reaching $141.8 million, or a 145% quarter-over-quarter growth rate versus last quarter's TSA adjusted net income. Adjusted net income reached $182.4 million, an increase of 60% quarter-over-quarter. Meanwhile, we also continue to expand our customer base at a strong clip, ending the quarter with 79.1 million clients. NetApps were very strong in Brazil, where we welcomed 4.4 million customers during the quarter. Our activity levels remain robust at 82%, even as we add more and more customers, demonstrating the intense engagement capacity of our platform. This slide offers a high-level overview of our recent financial performance trends, highlighting our ability to increase revenue while expanding profits. Over the past two years, New was able to double the number of customers from 37 million in early 2021 to more than 79 million at the end of the first quarter of 2023, and already surpassed 80 million customers by April. The strong growth of our customer base associated with the rise in cross-sale and up-sale implied by the high engagement for platform resulted in our quarterly revenues multiplying by almost seven X in only two years, a triple digit revenue kegger over this period. The next chart of this slide illustrates our resilient underwriting capabilities. Quarterly gross profit defined by total revenues deducted by funding costs, transactional expenses, and credit loss allowances increased by more than 5x in the period, with gross profit margins expanding accordingly, even though credit delinquency has increased in the market in which we operate over the past 12 months. Lastly, all of the aforementioned drivers, combined with the strong operating leverage of our platform and the initial maturation of our early products in Brazil, resulted in a significant acceleration of net income growth, particularly over the past three quarters, as you can appreciate in the chart on the right. This compounded effect should continue to be observed over the coming periods, providing a valuable combination of growth with increasing profitability in our platform. However, I want to dig a bit deeper into some core questions that we get from investors around growth potential and eventual steady state profitability of the platform. In Brazil, where we have been operating for nine years, our clients already account for a remarkable 46% of the total adult population of the country. It's staggering and at the same time gratifying to think that almost one in two Brazilians that own a smartphone is a Nubank customer. In Mexico and Colombia, where we have been for three years or less, our share of the total population is significantly lower, representing a tremendous opportunity for growth as we expand our product offering and create lasting relationships with our clients. But so far, the experience we're having in Mexico and in Colombia is more positive than what we saw in Brazil in the first few years. With three years of operations in Brazil, we had 1.2 million customers representing a penetration of less than 1% of the adult population of the country at that time, lower than what we now have in Mexico and Colombia. So, so far in Mexico and Colombia are beating Brazil at effectively all metrics from customer growth to early monetization and plans for these countries are ahead of expectations. While our customer penetration in Brazil is significant, when we delve into the market share we actually own in each profit pool, it is clear that we still have substantial room to expand our presence. The first important insight from the chart on this slide is that two thirds of all the profits of financial services in our three markets come from credit related products. This fact confirms that it is virtually impossible to build a large financial services business in the region without having credit underwriting as a core capability. It is also one of the reasons we decided to start new with a credit-first approach in 2013, as starting with payments and then pivoting to credit generally carries significant execution risk. Over the past four years, we have started to establish new toeholds in every additional credit segment. Today, our most mature products is credit cards, where we have only 11% market share in purchase volume across our three GEOs. We have resumed growth in our unsecured personal lending product in Brazil and expected to be an important driver of revenue and earnings growth. Last quarter, we also launched, still in beta, our first secure lending product, what in Brazil is known as Consignado. We are very excited about the feedback we're receiving from early customers and expect to see meaningful acceleration in this segment or the next four to eight quarters. In addition to building our core capability of credit in Brazil, we have also launched innovative products and investments, insurance and marketplace. Since we already have one of the largest fully digital consumer platforms in Brazil, we're able to bring new customers to these verticals at virtually zero additional acquisition cost and serve them at an extremely efficient cost to serve. This not only allows us to gain market share, but also increases the size of the addressable market as we bring in consumers that have been traditionally underserved by incumbents. We're pursuing a similar roadmap in Mexico and in Colombia over the next few years, supported by internally developed technology platforms, providing us both speed and quality. Beyond the significant growth runway we have ahead, the clear trend of the last nine quarters demonstrates the significant operating leverage of the platform and its potential to generate profits. Being the lowest cost manufacturer in an industry is a very important strategic position, and we believe we are reaching that point in Brazil. The charts on this slide illustrate this fact for our business in Brazil, our most mature market. On the left, we show the efficiency ratio for Brazilian unit over time. In the short time we've been operating in the country, at least compared to incumbents, we have been able to deliver best-in-class efficiency ratios with our cost-to-income ratio running now at mid-30% level. Meanwhile, the chart on the right provides evidence of the operating leverage of our platform. Our monthly RPAC, or average revenue per active customer, expanded by 2.5x between Q1 2021 and Q1 2023, whereas our monthly cost to serve remained virtually unchanged. Impressive enough, but this is only the start of the process. The monthly RPAC of our mature cohort is already upwards of $20, more than twice our current overall average, and the monthly RPAC for incumbents is about $40. As we grow, we're sharing the profit pools we're targeting and close the gap in ARPA to our peers, all while maintaining a multi-cost to serve below $1 per customer. We believe our efficiency ratio will set new records and our profitability will continue to increase. In talking about returns, I'd like to highlight the evolution of the key financial metrics we presented last quarter for both our holding company and our Brazilian operations. The momentum continued into the first quarter, as you can see by the numbers on this slide. As our Brazilian operations mature, positive results continue to compound and profitability is accelerated. Our adjusted net income in Brazil reached an impressive $200 million in the first quarter, representing an adjusted ROE of 43%. We achieved these results while maintaining a regulatory capital ratio of 18.7%, a cushion of over 80% on top of the minimum required of 10.5%. As our three GEOs scale and we enjoy the benefits of operating leverage that is inherent to our model, our holding company is starting to convert its potential into profits. New holdings adjust a net income of $182.4 million in the first quarter implies an adjusted return of equity of 14%. While our current levels of profitability are already on par with many traditional incumbent banks in the Latin American region, it's important to note that our excess cash of over $2 billion means that we're extremely well capitalized. Also important to remember that we're showing this level of profitability even while continuing to invest significantly in future products and while growing revenues by 87% year over year, a revenue growth rate that few financial institutions at scale are able to show. As seen, we're very excited with the momentum of the business. And now I would like to pass it over to my partner and CFO, Guillermo Lago, to dig in deeper into the numbers. Go ahead, Lago.