1 Key Metric That Could Make or Break Nu Holdings
The Brazilian digital bank Nu Holdings (NYSE: NU) recently reported earnings results for the fourth quarter of 2021, its first earnings report since going public toward the end of 2021. The results looked strong, driven by huge revenue growth. Nu also added millions of new customers to its already huge base and showed growth in other key metrics as well. While there is a lot to analyze, one metric that investors should focus on is monthly average revenue per active customer (ARPAC), because it has the potential to more or less make or break Nu. Let me explain.
At the end of 2021, Nu had about 54 million customers, which is a huge amount. But as those in banking will tell you, while having lots of customers is great, you need to be able to monetize that base. Some customers may cost you more to serve them than they are worth. One key metric that helps Nu determine how well it monetizes its customer base is ARPAC. Nu defines this metric as average monthly revenue divided by the average number of individual monthly active users for any given period.
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Source Fool.com
