Thread by @rodrigofm

Finally, we have Nu's F-1 with all their financial information. While I read it, I will write some notes here, with a special focus on its customer economics.

Let's see what we can find out about it.
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"For the nine months ended September 30, 2021, our CAC was US$5.0 per customer of which paid marketing accounted for approximately 20%."

"In addition, we believe our organic customer acquisition model is among the best-in-class as evidenced by the fact that we have acquired approximately 80%-90% of our customers organically on average per year since our inception."

It looks like they are showing a 'blended CAC', in which their case 'paid CAC' (the one that should be considered) would be US$25 or ~R$140.

"For the three months ended September 30, 2021, our Monthly ARPAC was approximately US$4.9.

For customers who were active across our core products, (...) [it was] US$23 to over US$34 range for the month of September 2021."

ARPAC = Average Revenue per Active Customer

This shows the ratio between the revenue of a cohort during the last twelve months compared to the revenue in the year the customer started working with them.

The clients have been getting more active on the app usage year after year.

"We estimate our LTV/CAC ratio to be greater than 30x. We intend to continue to invest in acquiring new customers and growing our existing customer base with our advantaged unit economics."

If we consider their 'paid CAC', their LTV/CAC would be 6x. Not bad, but not sooo good.

The shape of this curve looks wonderful, but again, if we consider the 'paid CAC', their break-even point would be much longer than 10 months.

Really good churn rate.

"(...) low customer churn, which in the nine months ended September 30, 2021 was on average 0.06% per month on a voluntary basis, defined as customers who chose to leave our platform; and 0.07% per month on an involuntary basis (...)"

It is great to have a customer metric table with clear information such as this one.

Great information here as well.

"We calculate LTV(..): (1) 12% per annum as the discount rate applied to the projected stream of contribution margin (..); (2) estimated lifetime capped at 10 years; and (3) growth and churn estimates based on historical analysis across our cohorts and estimated inflation rates."

It looks like they estimate their LTV using really good parameters.

Unlike many companies, they did not forget to use a good discount rate and to have a reasonable cap for the life of their customers.

Their cohorts are getting better and better.

They use this measure called ARPAC that tells the revenue per active user. While that may be interesting, we'd rather have the standard ARPU (average revenue per user).

In fact, the non-active user had a CAC just like the active user, so it wouldn't hurt to know about them all.

Nu is an amazing company and their F-1 is showing a great amount of information overall.

Unfortunately, there is this CAC issue and there is no Customer Cohort Chart (C3), a graph that would allow us a much better understanding of each cohort behavior.

Prof. @d_mccar, this is one of the most awaited IPO's in Brazilian history. I would love to hear your opinion about their F-1 and also about my notes.

sec.gov/Archives/edgar…

PS: Não tenho nenhuma opinião formada sobre a qualidade da ação do Nubank.

O que está dentro da minha competência é apenas chamar a atenção para algumas questões relacionadas ao unit economics do negócio.

.@patio11 just published some really interesting considerations about this organic/paid CAC issue.

https://twitter.com/patio11/status/1455342041102123009