Industry Overview - Emerging markets, which account for 85% of the global population, are driving a digital payments revolution projected to nearly double to $4.2 trillion by 2030 [1] - DLocal is positioned as a leading platform for merchants, providing access to over 900 local payment methods [1] Company Insights - DLocal is recognized as a premier bridge for merchants seeking convenient access to local payment solutions [1]

Core Viewpoint - DLocal continues to impress investors following its recent quarterly earnings release, with a notable increase in stock price after an analyst raised the price target [1] Group 1: Analyst Insights - Citigroup's Amon Shirazy increased DLocal's price target by 16% to $17 per share from $14.60, maintaining a buy recommendation [2] - The analyst raised his net income forecast for full-year 2025 by 15% and increased the 2026 projection by 5%, indicating confidence in the company's growth potential despite declining volumes [4] Group 2: Financial Performance - DLocal reported a 53% year-over-year increase in total payment volume, reaching $9.2 billion, alongside a 50% revenue improvement to $256 million for the second quarter [5] - The company raised its revenue and non-GAAP EBITDA guidance for the entirety of 2025, reflecting strong performance and positive outlook [5]

dLocal (NASDAQ: DLO ) is a rising fintech player in the emerging markets. After learning about it in late June, I have looked over it and pondered it carefully, looking at the current financial state, the risks, the milestones it mustI analyze securities based on value investing, an owner's mindset, and a long-term horizon. I don't write sell articles as those are considered short theses, and I never recommend shorting.Former advisory representative at Fidelity. I do my own investing now and share my resear ...

dLocal (NASDAQ: DLO ) is a rising fintech player in the emerging markets. After learning about it in late June, I have looked over it and pondered it carefully, looking at the current financial state, the risks, the milestones it mustI analyze securities based on value investing, an owner's mindset, and a long-term horizon. I don't write sell articles as those are considered short theses, and I never recommend shorting.Former advisory representative at Fidelity. I do my own investing now and share my resear ...

Core Insights - DLocal has returned to extraordinary growth after several weak quarters, showing improvements in transaction volume and take rate [1] Company Summary - DLocal is a payment processing company that specializes in emerging markets [1] - The recent quarterly report indicates a significant recovery in performance metrics, particularly in transaction volume and take rate [1]

Core Viewpoint - DLocal has returned to extraordinary growth in its recent quarterly report, showing improvements in transaction volume and take rate after several weak quarters [1] Company Summary - DLocal is a payment processing company that specializes in emerging markets [1] - The company has experienced a significant recovery in its performance metrics, indicating a positive trend in its business operations [1]

Group 1 - The cross-border payment space is highly fragmented, with many subscale companies resulting from the fintech financing boom prior to 2022, leading to a market structure with more companies than necessary [1] - This fragmentation contributes to a declining take rate, indicating potential challenges for companies operating in this space [1] - There is an expectation of consolidation in the industry, which may benefit the staying power of incumbent companies [1]

Group 1 - The cross-border payment space is highly fragmented, with many subscale companies resulting from the fintech financing boom prior to 2022, leading to an oversupply of payment companies [1] - This fragmentation contributes to a declining take rate, indicating a challenging market environment for companies operating in this sector [1] - There is a potential for consolidation in the industry, which may benefit the incumbents by strengthening their market position [1] Group 2 - Increased immersion in emerging market cross-border payments reveals positive aspects and opportunities within this segment [2]

Core Insights - Western Union has partnered with dLocal to enhance digital payment options in Latin America, aiming to provide a more agile and modern payment experience tailored to local preferences [1][2] - The collaboration is expected to empower customers with greater control over international money transfers, allowing them to select payment methods that suit their needs [2] - This partnership is part of a broader strategy to expand the digital financial ecosystem in Latin America, potentially creating new business opportunities [2] Group 1 - The partnership incorporates locally relevant payment methods, including cards and bank transfers, into Western Union's digital channels [1] - dLocal's VP of Sales America emphasized the commitment to boost digital remittances in emerging markets, aiming to reduce costs and speed up transfers [3] - Western Union's interim president highlighted the goal of providing superior solutions to enhance customer experience and facilitate meaningful connections [3] Group 2 - In June, dLocal partnered with BVNK to enable stablecoin-based payouts globally, indicating a trend towards modern payment solutions [3] - Western Union's recent acquisition of International Money Express (Intermex) for approximately $500 million reflects its strategy to strengthen its market position [4]

Summary of DLocal 2025 Conference Call Company Overview - **Company**: DLocal (NasdaqGS:DLO) - **Industry**: Cross-border payments, particularly in emerging markets Key Points Industry Dynamics - The cross-border payment space is highly fragmented with many sub-scale companies, leading to a declining take rate reality [1] - Emerging markets have a complex and varied payment ecosystem, differing significantly from developed markets [2][3] - Regulatory frameworks and tax regimes vary widely across different markets, adding to the complexity [2] Market Performance - DLocal experienced strong execution in Q2, with significant rebounds in Brazil and Mexico after a weak second half of 2024 [5] - Non-LATAM markets (Africa, Middle East, Asia) now represent nearly 25% of DLocal's business and are growing faster than LATAM [5] - The company anticipates a five to ten-year Total Addressable Market (TAM) in Africa and the Middle East [5] Growth Opportunities - DLocal aims to help global merchants navigate the complexities of emerging market payments, which supports sustainable high growth [11] - The average number of countries served for top merchants increased from 8 to 11, and payment methods from mid-30s to low 40s over the last 18 months [11] - The company has only 715 active merchants, indicating significant potential for growth as they can add thousands more [12] Merchant Concentration - The top 10 merchants account for 60% of revenue, but only half of them were in the top 10 cohort in 2023, indicating diversification [14] - DLocal processes only about 20% of payments for its existing merchant base in Latin America, suggesting room for growth [15] Take Rate and Profitability - There is an inverse relationship between volume growth and take rates due to volume discounts [18] - TPV growth has consistently offset take rate compression, leading to accelerated gross profit dollar growth [18] - The company focuses on gross profit dollar growth rather than take rates as an input for financial modeling [19] Operational Improvements - DLocal has made significant investments in operations, product, technology, and compliance, improving internal controls and operational robustness [21][23] - The company is pursuing licenses in multiple jurisdictions, including the UK, EU, and the U.S., indicating confidence in its operations [22] Future Investments and Margins - DLocal's business model is asset-light and cash flow positive, with potential for high EBITDA margins [24] - The company sees opportunities to leverage AI to reduce costs in manual processes, aiming to return to 75% EBITDA margins [25] Competitive Landscape - The fragmented market may invite competition, but DLocal believes that scale can provide pricing benefits to clients, potentially crowding out smaller competitors [26] - Take rates are expected to decline over the next 24 months but will stabilize at a higher level than developed world payment service providers [27] Regional Insights - Brazil's growth is attributed to stabilization with a previously large merchant and a pickup in installment payments [31] - Argentina's outlook is uncertain due to recent political changes and currency devaluation, but demand for cross-border trade remains strong [32][33] - Opportunities are seen in Africa and the Middle East, while Egypt is identified as a potential weak spot [34] Stablecoin and Product Development - DLocal views stablecoins as an opportunity for on-ramps and off-ramps in local currency transactions [35][36] - The company is piloting new products, including credit solutions and point-of-sale systems, to enhance its service offerings [41][43] Conclusion - DLocal is positioned for growth in a complex and fragmented market, with a focus on operational improvements, product diversification, and leveraging emerging market opportunities. The company remains optimistic about its future despite inherent market volatility [45][46]