DLocal Reports Mixed Financial Results Amidst Strong Growth In Emerging Markets
$DLO
DLocal Limited (NASDAQ:’DLO’), a prominent fintech company specializing in cross-border payments, has recently made headlines with its impressive financial performance and strategic expansions. The company, which facilitates seamless transactions in emerging markets, reported a significant increase in revenue for the latest quarter, driven by robust growth in Latin America and Asia. Additionally, DLocal announced new partnerships with major global merchants, further solidifying its position as a key player in the international payments landscape.
The Montevideo-based firm, which operates across Latin America, Africa and Asia, reported a 50.1% decline in net income to $17.7 million compared to the same period last year. The company saw a 34% rise in revenues, reaching $184 million, slightly below the $190 million forecasted by analysts. DLocal’s total payment volume (TPV) for the quarter hit a record $5.3 billion, marking a 49% year-over-year increase. This growth was driven by significant gains in various verticals, including ecommerce, remittances and ride-hailing.
The firm’s cross-border processing also reached a new high of $2.4 billion in TPV, reflecting a 9% quarter-over-quarter increase. However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 19% to $37 million, missing the analyst forecast of $48 million. The company attributed the mixed financial results to several factors, including a shift in product mix towards lower monetizing payout volumes and delays in new merchant launches. As well, one of dLocal’s largest merchants achieved a new pricing tier, impacting revenue growth. The company reported strong performance in key markets such as Brazil and Mexico, with revenues increasing by 89% and 50% year-over-year, respectively.
During the quarter, DLocal appointed Mark Ortiz, previously with GE Capital, as its new Chief Financial Officer. The company also continued to invest in technology and talent, adding 50 full-time employees, primarily in tech, sales and operations. These investments contributed to a 60% year-over-year increase in operating expenses, impacting the company’s operating income, which fell by 32% to $26.9 million. Geographically, the industry saw robust revenue and gross profit growth in Africa and Asia, increasing by 51% and 60% year-over-year, respectively. In Egypt, revenues grew 11 times year-over-year, driven by strong merchant growth.
Conversely, Nigeria experienced a 73% year-over-year decline in revenues due to tighter spreads between market and official rates and a higher proportion of local-to-local volumes. The company ended the quarter with $320 million in funds, including $212 million in available cash. The Board has authorized a new share repurchase program of up to $200 million, underscoring confidence in the firm’s future. CEO Pedro Arnt emphasized the company’s commitment to long-term growth, noting that the ongoing investments in technology and talent are strategic for sustained success.
As DLocal navigates the complexities of emerging markets, it continues to focus on expanding its global footprint and enhancing its payment solutions. The company’s ability to adapt to market conditions and invest in growth areas positions it well for future opportunities. However, the impact of external factors such as macroeconomic conditions and regulatory changes remains a variable that the company will continue to manage. The first-quarter results highlight both the potential and challenges of operating in diverse and dynamic markets. While the company achieved significant growth in TPV and revenues, it also faced hurdles that impacted profitability.
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