Release Date: February 27, 2025

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 TPV of $26 billion in 2024, marking a 45% year-over-year increase.
• The company delivered a gross profit of $295 million and maintained a strong adjusted EBITDA over gross profit margin of 64%.
• DLocal Ltd (NASDAQ:DLO) expanded its team significantly, adding 194 new talents, particularly in technology and product development.
• The company launched 20 new payment methods for pay-ins and seven for payouts, enhancing its product offerings.
• DLocal Ltd (NASDAQ:DLO) secured nine new licenses globally, expanding its product offerings and access to new growth opportunities.

Negative Points

• The company experienced a decline in gross profit in its largest markets, Brazil and Mexico, despite overall growth.
• Currency devaluations, particularly in Nigeria, negatively impacted revenue growth.
• There was a noted compression in the net take rate due to higher volumes driving lower take rates and increased payout share.
• DLocal Ltd (NASDAQ:DLO) faced challenges with temporary settlement delays and changes in settlement periods affecting cash flow.
• The company anticipates potential tightening of FX spreads in certain geographies, which could impact financial performance.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with FRA:C5H.

Q: How does DLocal factor in foreign exchange (FX) when setting guidance, considering it was a headwind in 2024? A: DLocal assumes general steady FX rates from where the last year ended, without baking in too many assumptions around FX. If currency depreciation continues, it will be a headwind, but if trends hold up, it could be a tailwind. (Pedro Art, CEO)

Q: Can you explain the cash decrease in the quarter and the changes in settlement with merchants? A: The cash decrease was due to temporary settlement delays and changes in settlement periods with merchants. There were large volumes at the end of the year, causing delays in funds, which have since been received. Additionally, a new orchestration model in Brazil shortened settlement periods, affecting working capital. (Mark Reitz, CFO)

Q: What are the expectations for gross profit growth, considering the strong ramp-up in the second half of 2024? A: The guidance reflects robust TPV growth and revenue growth, with a focus on sustaining high TPV growth despite take rate compression. The growth is driven by merchants hitting higher tiers and the ramp-up of new products, with adjusted EBITDA margins expected to grow faster than gross profit. (Pedro Art, CEO)

Q: How does the orchestration model impact settlement periods and financial results? A: The orchestration model allows direct settlement to merchants, reducing the days of merchant funds on the balance sheet. It does not involve financing merchants for more days, thus not impacting net financial results. (Pedro Art, CEO)

Q: What is the outlook for new merchant growth versus existing merchants in 2025? A: DLocal expects continued high net TPV retention and a pickup in volume from new merchants, driven by a strong pipeline and the ability to offer new markets and payment methods to existing merchants. The 2024 cohort showed record TPV, indicating strong potential for new merchant growth. (Pedro Art, CEO)

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