• Total Payment Volume (TPV): $6.5 billion, up 41% year-over-year and 8% quarter-over-quarter.
• Cross Border TPV: $3 billion, up 12% quarter-over-quarter and 35% year-over-year.
• Local to Local TPV: Increased by 4% quarter-over-quarter and 47% year-over-year.
• Revenue: $186 million, up 13% year-over-year and 8% quarter-over-quarter.
• Gross Profit: $78 million, up 5% year-over-year and 12% quarter-over-quarter.
• Adjusted EBITDA: $52 million, up 23% quarter-over-quarter, with a margin of 28%.
• Net Income: $27 million, down 42% quarter-over-quarter and 34% year-over-year.
• Operating Expenses: $37 million, a 6% decrease quarter-over-quarter and a 61% increase year-over-year.
• Cash Position: $320 million, including $208 million of available cash and $112 million of short-term investments.
• Cash Flow from Operating Activities: $26 million, up 37% from the previous quarter.

• Warning! GuruFocus has detected 5 Warning Signs with GOEV.

Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DLocal Ltd (NASDAQ:DLO) achieved a record total payment volume (TPV) of $6.5 billion, marking a 41% year-over-year increase.
• The company reported a record gross profit of $78 million, with stable net take rates at 1.2% since Q1 2024.
• DLocal Ltd (NASDAQ:DLO) successfully integrated major players like MoneyGram, enhancing its service offerings across Latin America, Africa, and Asia.
• The company launched innovative products such as smart requests and a standalone payment orchestration option, improving transaction performance and expanding service capabilities.
• DLocal Ltd (NASDAQ:DLO) continues to expand its license portfolio, obtaining new licenses in Nigeria, Ecuador, and Uganda, which strengthens its competitive advantage in emerging markets.

Negative Points

• The company experienced a loss of share of wallet in Brazil due to regulatory changes affecting a top merchant, impacting credit card payment volumes.
• Adjusted EBITDA was down year-over-year, despite showing operational leverage improvements in recent quarters.
• Net income decreased by 42% quarter-over-quarter and 34% year-over-year, primarily due to lower finance results and higher finance costs.
• The company faces challenges from currency devaluation in key markets like Nigeria, affecting revenue and gross profit.
• Despite strong growth in other regions, Brazil's performance was soft, driven by a loss of share of wallet with a top commerce merchant.

Q & A Highlights

Q: Can you provide more details on the gross profit loss in Brazil and the decrease in G&A expenses? A: Pedro Arnt, CEO, explained that the loss in Brazil was due to a top merchant being granted a payment institution license, requiring them to process directly with acquirers. This situation is specific to Brazil's regulatory environment and not expected to be widespread. Regarding G&A expenses, Mark Ortiz, CFO, noted that the decrease was due to cost control measures, but investments in product and IT will continue, with costs expected to rise slightly in the future.

Q: What is driving the strong gross profit growth in other geographies outside the core markets? A: Pedro Arnt, CEO, highlighted that the growth is driven by the cross-border business, which reached $3 billion in TPV for the first time. This growth is supported by diversification into more markets, including strong performances in South Africa, Colombia, and Peru, alongside continued strength in Mexico and Egypt.

Q: How should we think about the fourth quarter guidance as a run rate for 2025? A: Pedro Arnt, CEO, stated that while the company is optimistic about the pipeline and has seen consistent improvement, the fourth quarter is heavily influenced by seasonal factors, particularly in e-commerce. The company will provide more clarity on 2025 during its mid-term guidance review.

Q: What is DLocal's competitive advantage in the remittance market? A: Pedro Arnt, CEO, explained that DLocal's strength lies in its ability to offer fast payouts, competitive FX pricing, and strong liquidity due to its dual capabilities in pay-ins and payouts. The company's comprehensive technology stack and local integrations provide a significant advantage in serving remittance companies.

Q: How should we view the gross profit margin differences between Latin America and other regions? A: Pedro Arnt, CEO, noted that while there is potential for cost improvements through scale, cross-border markets tend to have higher margins due to a mix of cross-border transactions and exotic currencies. The company focuses on optimizing gross profit dollars rather than targeting specific margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.