Core Insights - The article emphasizes the investment philosophy focused on identifying mispriced securities through understanding the financial drivers of companies, often revealed by a DCF model valuation [1] Investment Philosophy - The investment approach is not confined to traditional categories such as value, dividend, or growth investing, but rather considers all prospects of a stock to assess risk-to-reward [1]

Core Viewpoint - DLocal reported quarterly earnings of $0.15 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, and showing an increase from $0.07 per share a year ago, representing a 25% earnings surprise [1][2] Financial Performance - The company achieved revenues of $216.76 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.92%, and up from $184.43 million year-over-year [2] - Over the last four quarters, DLocal has exceeded consensus EPS estimates three times, but has only topped revenue estimates once [2] Stock Performance and Outlook - DLocal shares have declined approximately 12.5% since the beginning of the year, contrasting with the S&P 500's slight gain of 0.1% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $227.42 million, and for the current fiscal year, it is $0.55 on revenues of $952.81 million [7] - The estimate revisions trend for DLocal is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Financial Transaction Services industry, to which DLocal belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - The total payment volume (TPV) reached $8 billion, reflecting a 53% year-over-year growth and a 5% quarter-over-quarter increase [6][17] - Revenue hit a record high of $217 million, up 18% year-over-year and 36% in constant currency [19] - Gross profit also reached a record level of $85 million, up 35% year-over-year or nearly 60% in constant currency [20] - Net income for the quarter was $47 million, representing a 57% quarter-over-quarter increase and a 163% year-over-year increase [25] - Free cash flow amounted to $40 million, up from $33 million in the previous quarter, indicating a 22% increase [26] Business Line Data and Key Metrics Changes - Cross-border flows grew 14% quarter-over-quarter and 76% year-over-year, reaching $4 billion for the first time [17] - Local to local TPV decreased by 3% quarter-over-quarter but increased by 33% year-over-year [18] - The pay-ins business grew 2% quarter-over-quarter and 49% year-over-year, while the payouts business grew 12% quarter-over-quarter and 61% year-over-year [18] Market Data and Key Metrics Changes - The company experienced strong growth in emerging markets, particularly in Chile, Pakistan, Nigeria, Turkey, and Brazil [6][7] - Geographic diversification contributed to sustained growth momentum, even amid challenges in specific markets [20] Company Strategy and Development Direction - The company is focused on strategic investments in technology and operations to enhance efficiency and service quality [5][10] - There is a commitment to leveraging automation and AI to drive operational efficiency and optimize performance [10][11] - The company aims to expand its licensed portfolio to navigate complex regulatory environments, adding three new registrations in the first quarter [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of emerging markets, driven by demographic and technological shifts [31][32] - The company anticipates continued demand for localized payment solutions as emerging markets gain prominence [33] - Management reaffirmed full-year guidance and commitment to disciplined execution for sustainable growth [34] Other Important Information - The Board of Directors approved a dividend policy, with an extraordinary cash dividend of approximately $150 million [27][28] - The company plans to return 30% of free cash flow to shareholders annually, with the first dividend payable in 2026 [28] Q&A Session Summary Question: Growth in Argentina and Mexico - Management indicated that growth in Argentina appears sustainable due to increased interest from global merchants, while Mexico requires better execution to reignite growth [36][39] Question: Operating Expenses and Take Rates - Operating expenses grew 3% in the quarter, with management noting a focus on responsible spending [46][48] - The decline in take rates was attributed to a mix shift away from a high take rate merchant in the advertising sector [49][50] Question: Performance in Other LATAM Markets - Strong performance in Other LATAM was driven by TPV growth in frontier markets, particularly in Chile [53][56] Question: Brazil's Revenue and Gross Profit Dynamics - Brazil's revenue and gross profit faced challenges due to a repricing from a major merchant and migration to a lower take rate product [62][65] Question: Capital Allocation and M&A Strategy - The company is exploring M&A opportunities to enhance its capabilities and is confident in its asset-light business model [87][70] Question: Trends in April and May - Management noted that trends in April and May have remained within expectations, with no significant signs of slowdown [93][94]

Financial Data and Key Metrics Changes - The total payment volume (TPV) reached $8 billion, reflecting a 53% year-over-year growth and a 5% quarter-over-quarter increase [7][17] - Revenue hit a record high of $217 million, up 18% year-over-year and 36% in constant currency [19] - Gross profit reached $85 million, up 35% year-over-year or nearly 60% on a constant currency basis [20] - Net income for the quarter was $47 million, up 57% quarter-over-quarter and 163% year-over-year [24] - Free cash flow amounted to $40 million, representing a 22% increase from the previous quarter [25] Business Line Data and Key Metrics Changes - Cross-border flows grew 14% quarter-over-quarter and 76% year-over-year, reaching $4 billion [17] - Local to local TPV decreased by 3% quarter-over-quarter but increased by 33% year-over-year [18] - The pay-ins business grew 2% quarter-over-quarter and 49% year-over-year, while the payouts business grew 12% quarter-over-quarter and 61% year-over-year [18] Market Data and Key Metrics Changes - Strong growth was noted in emerging markets, particularly in Chile, Pakistan, Nigeria, Turkey, and Brazil [8] - The company experienced robust growth across multiple verticals, including remittances, commerce, financial services, and streaming [8] Company Strategy and Development Direction - The company is focused on strategic investments in technology and operations to enhance efficiency and service quality [6][12] - There is a commitment to leveraging automation and AI to drive operational efficiency and optimize performance [11][12] - The company aims to expand its licensed portfolio to navigate complex regulatory environments [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of emerging markets despite short-term macroeconomic headwinds [30][31] - The company anticipates continued demand for localized payment solutions as emerging markets gain prominence [32] - Management reaffirmed full-year guidance and commitment to disciplined execution for sustainable growth [33] Other Important Information - The Board of Directors approved a dividend policy, with an extraordinary cash dividend of approximately $150 million [26][27] - The company plans to return 30% of free cash flow as annual dividends starting in 2026 [27] Q&A Session Summary Question: Growth in Argentina and Mexico - Management indicated that growth in Argentina appears sustainable due to increased interest from global merchants, while Mexico requires better execution to reignite growth [38] Question: Operating Expenses - Operating expenses grew 3% in the quarter, with management indicating a focus on responsible expense management [45][48] Question: Performance in Other LATAM - Strong performance in Other LATAM was attributed to improved take rates and volume growth in frontier markets, particularly in Chile [56] Question: Brazil's Revenue and Gross Profit - Management noted that Brazil is beginning to stabilize, with volume growth expected to improve as execution enhances [64] Question: Competition and Market Dynamics - Management acknowledged that share losses in Mexico and Brazil could be attributed to competitive dynamics but expressed confidence in regaining market share through improved execution [78][82] Question: M&A Opportunities - The company is exploring M&A opportunities, particularly in acquiring subscale fintech companies that could complement its existing services [88] Question: Future Operating Expenses - Management expects operating expenses to increase in the coming quarters as investments ramp up, particularly in technology [92]

Financial Data and Key Metrics Changes - Total Payment Volume (TPV) reached $8 billion, reflecting a 53% year-over-year growth and a 5% quarter-over-quarter increase, with a constant currency growth of 72% [6][17]. - Revenue hit a record high of $217 million, up 18% year-over-year and 36% in constant currency [19]. - Gross profit reached $85 million, representing a 35% year-over-year increase or nearly 60% in constant currency [20]. - Net income for the quarter was $47 million, up 57% quarter-over-quarter and 163% year-over-year [25]. - Free cash flow amounted to $40 million, a 22% increase from the previous quarter [26]. Business Line Data and Key Metrics Changes - Cross-border flows grew 14% quarter-over-quarter and 76% year-over-year, reaching $4 billion [17]. - Local to local TPV decreased by 3% quarter-over-quarter but increased by 33% year-over-year [18]. - Pay-ins business grew 2% quarter-over-quarter and 49% year-over-year, while payouts business grew 12% quarter-over-quarter and 61% year-over-year [18]. Market Data and Key Metrics Changes - Strong growth was noted in emerging markets, particularly in Chile, Pakistan, Nigeria, Turkey, and Brazil [7]. - The company experienced robust growth across multiple verticals, including remittances, commerce, financial services, and streaming [7]. Company Strategy and Development Direction - The company is focused on strategic investments in technology and operations to enhance efficiency and expand service offerings [6][11]. - There is a commitment to leveraging automation and AI to drive operational efficiency and optimize performance [10][11]. - The company aims to grow its licensed portfolio to navigate complex regulatory environments, adding three new registrations in the first quarter [13]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of emerging markets despite short-term macroeconomic headwinds [30][32]. - The company anticipates continued demand for localized payment solutions as emerging markets gain prominence [33]. - Management reaffirmed full-year guidance and commitment to disciplined execution for sustainable growth [34]. Other Important Information - The Board of Directors approved a dividend policy, with an extraordinary cash dividend of approximately $150 million [27][28]. - The company plans to return 30% of free cash flow as annual dividends starting in 2026 [28]. Q&A Session Summary Question: Growth in Argentina and Mexico - Management indicated that growth in Argentina appears sustainable due to increased interest from global merchants, while Mexico requires better execution to reignite growth [38]. Question: Take Rates in Argentina - The higher take rates in Argentina are considered sustainable due to the nature of the products offered, which include receivables discounting [42]. Question: Operating Expenses - Operating expenses are expected to increase in subsequent quarters, but management emphasized a focus on responsible spending [48][91]. Question: Brazil's Revenue and Gross Profit - Brazil's revenue and gross profit have been impacted by a repricing from a major merchant and a migration to a lower take rate product, but management sees potential for recovery [66][68]. Question: Competition and Market Dynamics - Management acknowledged that share losses in Mexico and Brazil could be attributed to competitive dynamics but expressed confidence in regaining market share through improved execution [78][83]. Question: M&A Opportunities - The company is actively exploring M&A opportunities, particularly in the fintech space, to enhance its capabilities and market position [88].

Financial Performance - Total Payment Volume (TPV) reached $8.1 billion, a 53% year-over-year increase and a 5% quarter-over-quarter increase[16] - Revenue was $217 million, up 18% year-over-year and 6% quarter-over-quarter[17] In constant currency, revenue increased 36% year-over-year[17,76] - Gross profit was $85 million, a 35% year-over-year increase and a 1% quarter-over-quarter increase[19] In constant currency, gross profit increased 59% year-over-year[17,76] - Adjusted EBITDA was $58 million, up 57% year-over-year and 2% quarter-over-quarter, with an Adjusted EBITDA/Gross Profit Ratio of 68%[18] - Net income was $47 million, up 163% year-over-year and 57% quarter-over-quarter[18] - Free cash flow (FCF) was $40 million, up 200% year-over-year and 22% quarter-over-quarter, with FCF to net income ratio at 85%[20] TPV Breakdown - Cross-border TPV reached $4 billion, up 76% year-over-year and 14% quarter-over-quarter[32,36] Cross-border TPV accounted for 53% of total TPV[31,63] - Local-to-local TPV increased 33% year-over-year but decreased 3% quarter-over-quarter[32] Local-to-local TPV accounted for 47% of total TPV[31,63] - Pay-ins TPV increased 49% year-over-year and 2% quarter-over-quarter[33] Pay-ins accounted for 67% of total TPV[33,62] - Pay-outs TPV increased 61% year-over-year and 12% quarter-over-quarter[33] Pay-outs accounted for 33% of total TPV[33,62] Regional Performance - Latin America revenue increased 30% year-over-year and 7% quarter-over-quarter[37] - Africa & Asia revenue decreased 9% year-over-year but increased 4% quarter-over-quarter[37]

Financial Performance - Total Payment Volume (TPV) reached $8 billion, representing a 53% year-over-year (YoY) increase and a 5% quarter-over-quarter (QoQ) increase; in constant currency, TPV would have increased by 72% YoY [12]. - Revenue for Q1'25 was $217 million, up 18% YoY and 6% QoQ; in constant currency, revenue growth was 72% YoY [17]. - Adjusted EBITDA was $58 million, reflecting a 57% YoY increase and a 2% QoQ increase, with an Adjusted EBITDA to Gross Profit ratio of 68% [18]. - Net income grew to $47 million, a 163% YoY increase and a 57% QoQ increase, driven by positive non-cash effects related to Argentine bond investments [18]. - Free cash flow (FCF) reached $40 million, up 200% YoY and 22% QoQ, with a cash conversion ratio of 85% [20]. - Revenue for Q1'25 was $216.8 million, an 18% increase compared to $184.4 million in Q1'24 [76]. - Gross profit for Q1'25 amounted to $84.9 million, reflecting a 35% growth from $63.0 million in Q1'24 [76]. - Adjusted EBITDA for Q1'25 was $57.9 million, compared to $36.8 million in Q1'24, indicating significant operational improvement [74]. - Adjusted net income for Q1'25 was $50.9 million, up from $20.7 million in Q1'24 [75]. - Revenue from Latin America in Q1'25 was $162.9 million, a 30% increase from $125.4 million in Q1'24 [65]. - The company reported a gross profit margin of 39.2% in Q1'25, compared to 34.2% in Q1'24 [66]. Operational Efficiency - Automation and AI investments improved operational efficiency, leading to better conversion rates and reduced processing times [14]. - TPV retention rate was 144%, indicating strong merchant base defensibility [13]. - Significant growth in remittances at 184% YoY, driven by successful commercial efforts [30]. - Cross-border transactions accounted for 53% of total TPV in Q1'25, up from 46% in Q1'24 [64]. - The top 10 merchants contributed 60% of total revenue in Q1'25, with a Net Revenue Retention (NRR) rate of 113% [68]. Market Expansion - The company launched operations in two new markets in Africa, enhancing its geographic footprint [22]. - The company reaffirmed its full-year guidance, indicating confidence in long-term value creation [58]. Working Capital - Working capital changes showed a positive shift with a $39 million increase in Q1'25, reversing a negative trend from previous quarters [79].

Core Insights - dLocal achieved record highs in key financial and operational metrics for Q1 2025, including Total Payment Volume (TPV), revenue, and gross profit [2][6][8] Financial Performance - Total Payment Volume (TPV) reached US$8.1 billion, representing a 53% year-over-year increase and a 5% quarter-over-quarter increase [2][6][8] - Revenue for the quarter was US$216.8 million, up 18% year-over-year and 6% quarter-over-quarter [2][6][8] - Gross profit was US$84.9 million, a 35% increase compared to Q1 2024 [2][6][8] - Adjusted EBITDA was US$57.9 million, reflecting a 57% year-over-year increase [2][10][12] - Net income for Q1 2025 was US$46.7 million, a significant increase of 163% compared to Q1 2024 [10][12][14] Operational Efficiency - Adjusted EBITDA margin improved to 27%, up from 20% in Q1 2024 [10][12] - Free cash flow for the quarter was US$39.7 million, a 200% increase year-over-year [10][12] - The company maintained a strong cash position with US$511.5 million in cash and cash equivalents as of March 31, 2025 [10][12][15] Strategic Execution - The management team effectively leveraged existing merchant relationships and established new partnerships, contributing to the strong financial performance [5][10] - The company focused on expanding its license portfolios through its legal and regulatory teams [5][10] Market Position - dLocal operates in over 40 countries across Africa, Asia, and Latin America, connecting global enterprise merchants with emerging market consumers [19][20]

Company Overview - DLocal (DLO) is expected to report a year-over-year increase in earnings, with a projected EPS of $0.12, reflecting a +71.4% change, and revenues of $210.62 million, up 14.2% from the previous year [3]. Earnings Expectations - The upcoming earnings report is anticipated to be released on May 14, and the stock may rise if the actual results exceed expectations, while a miss could lead to a decline [2][3]. - The consensus EPS estimate has been revised down by 7.41% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for DLocal matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, which complicates predictions of an earnings beat [10][11]. - DLocal currently holds a Zacks Rank of 3 (Hold), suggesting that it may not be a strong candidate for an earnings beat [11][16]. Historical Performance - In the last reported quarter, DLocal met the expected EPS of $0.15, resulting in no surprise, and has beaten consensus EPS estimates in two out of the last four quarters [12][13]. Industry Context - Another player in the financial transaction services industry, Ryvyl (RVYL), is expected to report a loss of $0.27 per share, with revenues projected at $15.54 million, down 7.3% year-over-year [17]. - Ryvyl's consensus EPS estimate has been revised down by 94.7% over the last 30 days, but it currently has an Earnings ESP of 7.41%, indicating a likelihood of beating the consensus EPS estimate [18].

Competition and Market Dynamics - The company operates in a highly competitive electronic payments market, facing substantial competition from larger firms with greater resources and established relationships with merchants [46]. - The company has a limited operating history since its inception in 2016, and its revenue growth rate is expected to slow as the business matures [51]. - The company may face pricing pressures from competitors who can offer lower prices through cross-subsidization, potentially impacting profit margins [47]. - The electronic payment industry is sensitive to economic conditions, with potential impacts from geopolitical tensions and inflation affecting consumer spending [115]. - The ongoing conflict between Russia and Ukraine has led to increased energy prices and inflation, which could further impact macroeconomic conditions globally [117]. Ownership and Control - As of December 31, 2024, holders of Class B common shares own 46.96% of outstanding shares and control 81.57% of voting rights, significantly influencing corporate decisions [41]. - The concentration of ownership among Class B shareholders may limit the ability of other shareholders to influence corporate matters [218]. - Class B shareholders have preemptive rights to acquire additional shares, which may impair the company's ability to raise funds [219]. - The dual class structure of common stock concentrates voting control, with Class B shares having five votes per share compared to one vote for Class A shares [227]. Regulatory and Compliance Risks - The company is subject to complex and evolving regulatory environments in the countries it operates, which could impact its ability to maintain necessary licenses and permissions [41]. - The company expects to expend significant resources to maintain compliance with evolving data protection laws, which could impose substantial costs and operational challenges [74]. - The company is licensed and regulated in multiple jurisdictions, including the EU as an Electronic Money Issuer and in the UK as a Payment Institution, with operations primarily in Latin America [80]. - The company may face reputational harm and legal liability due to challenges in managing artificial intelligence applications, which are increasingly integrated into its operations [75]. - The company is subject to stringent anti-corruption and anti-bribery laws, which impose liability for engaging in improper activities [141]. Financial Performance and Growth - The company is experiencing significant expansion and anticipates continued growth to address potential increases in its customer base and market opportunities [55]. - The top 10 customers accounted for 62% of the company's revenues in the year ended December 31, 2024, compared to 60% in 2023 and 50% in 2022 [66]. - The company’s future growth depends on its ability to attract and retain merchants, as well as to expand its product portfolio, including cryptocurrency processing [48]. - The company’s working capital needs may grow beyond its cash generation capabilities, leading to potential declines in cash reserves and slower growth [54]. Cybersecurity and Operational Risks - The company faces risks from cyberattacks and data breaches, which could materially affect its reputation and financial condition [68]. - The company experienced a cybersecurity breach in 2019, resulting in a loss of approximately US$ 516 thousand due to fraudulent cash withdrawals [71]. - The company has limited insurance coverage for cybersecurity risks, which may expose it to significant expenditures in the event of a major claim [78]. - The company relies heavily on third-party services, including Amazon Web Services, Google Cloud, and Microsoft Azure, for its operations, making it vulnerable to service disruptions [111]. Market and Economic Conditions - The company is exposed to currency risk from fluctuations in foreign exchange rates, particularly with currencies like the Argentine peso and Brazilian real, which have experienced significant devaluations [89]. - Political and economic instability in Brazil and Argentina poses risks to business operations, potentially affecting financial performance [192]. - The company faces challenges from inflationary pressures in Latin America, driven by supply shocks and currency depreciation, which may persist into early 2025 [196]. - The political environment in Latin America, Africa, and Asia significantly influences economic performance, with potential adverse effects on business operations [198]. Legal and Litigation Risks - Ongoing litigation and investigations could materially affect the company's financial position and results of operations, with potential reputational harm [167]. - The company may incur significant legal expenses related to cybersecurity attacks, which could negatively impact its financial condition [74]. - The company faces risks related to operational controls and procedures, which may fail or be circumvented, adversely affecting financial results [148]. Strategic Initiatives and Challenges - The company is expanding into new geographies and industry verticals, which may strain resources and introduce new challenges [58]. - The company is developing new payment solutions involving cryptocurrencies, which may expose it to additional regulatory risks and compliance challenges [86]. - The company may pursue strategic acquisitions, but there is no guarantee of finding suitable targets or completing acquisitions on acceptable terms [160]. - The success of acquisitions depends on accurate assumptions regarding valuation and integration; failure to integrate could lead to unforeseen costs and operational difficulties [161].