Focused on growth, Nubank has a loss of BRL 122 million (proximally $ 39 million) in 2016.
Nubank, Brazil’s biggest Fintech startup, reported a net loss of BRL 122 million last year. In 2015, the loss had been BRL 32.7 million. Operating income in the period was BRL 77.09 million, a significant expansion of BRL 10.4 million from the previous year.
Today the Startups has next to a million active users of its famous purple color MasterCard credit cards.
Gabriel Silva, chief financial officer of Nubank, attributes the accelerated growth of the startup. The company enters its third year focused on investments in technology and infrastructure. “We have a low cost of user acquisition, but a cost for manufacturing and sending the credit cards,” he says. When will the profit come? “If you keep growing a lot, that day is going to be delayed a bit,” he says.
Silva says the priority, on short-term, it’s more to focus on profitable accounts and less on make a net profit – a strategy that shareholders understand and feel comfortable about, according to him.
For growth acceleration, the company has BRL 500 million in cash, which should be used mainly to finance the credit operations, expansion of users, as well as investments in technology.
Asked if the startup plans to change its main attraction – no annuity fees on their credit cards -, Silva merely says he has nothing to comment on. Today, one of Nubank’s main sources of revenue is an exchange fee charge – the fraction of the merchant’s charge that is designated to the card issuer.
In order to finance the operations with the rotary – whose rates vary from 2.75% to 14% per month – Nubank allocates part of its card receivables portfolio to a fund. The portfolio totals BRL 1.4 billion, while the receivables fund closed 2016 with approximately BRL 150 million. The company has also entered a request to set up a financial company, which is strategically relevant to boost a central part of its business, which is to originate credit. “Through a license, we will have more control over the process and more freedom for new products,” he says.
Managed entirely by smartphones, Nubank has already received more than 9 million applications for its credit card, considered the most successful fintech startup case in Brazil. In order to increase its portfolio, Nubank has been testing its own rewards program since last year, which provides for an exchange of 1 point for each Brazil Real (BRL) spent. The points never expire and can be exchanged for airfare tickets and other services, like Netflix subscription.