DLocal (DLO)2024-03-19 20:21Company Overview and Growth - The company has a limited operating history since its inception in 2016, and its revenue growth rate is expected to slow down as the business matures[54]. - The company is experiencing significant expansion and plans to continue investing in infrastructure and internal controls to manage growth effectively[58]. - The company must continuously invest in new product development and market expansion to remain competitive, which carries risks of cost overruns and delays[46]. - The company’s growth depends on its ability to attract and retain merchants, and any failure in this area could limit revenue growth[51]. - The company is expanding into new geographies and industry verticals, which may strain resources and introduce new challenges[62]. - The company plans to hire approximately 100 people over the next year and 300 people in the medium term in Argentina, with an aggregate investment of up to US10,000, with penalties for non-compliance that could adversely affect financial condition and operations[146]. - Compliance with operating rules set by payment networks and credit card schemes is mandatory, and violations could lead to penalties, service suspensions, or increased operational costs[130]. Cybersecurity and Data Protection - The company faces potential cybersecurity threats that could result in data breaches and negatively impact its reputation and financial condition[73]. - The company does not maintain insurance coverage for cybersecurity risks, which may lead to significant expenditures in the event of a breach[79]. - The company experienced a cybersecurity breach in 2019, resulting in a loss of approximately US$516 thousand due to fraudulent cash withdrawals[75]. - The company expects to continue investing significant resources to enhance cybersecurity measures and comply with data protection laws[78]. Economic and Geopolitical Factors - The ongoing geopolitical conflicts may adversely affect the global economy, impacting the company’s operations and market conditions[41]. - The ongoing conflict between Russia and Ukraine has led to increased inflation and volatility in financial markets, potentially impacting the company's operations[120]. - Inflationary pressures have increased recently across Latin America due to supply shocks, climate events, and currency depreciation, impacting economic conditions[201]. - Political, social, and economic uncertainties in Latin America, Africa, and Asia could materially affect the company's business and financial condition[211]. Ownership and Shareholder Dynamics - As of December 31, 2023, holders of Class B common shares own 45.29% of outstanding common shares and 80.54% of voting rights, significantly influencing corporate matters[44]. - The concentration of ownership among Class B shareholders may limit the ability of other shareholders to influence corporate matters[222]. - Class B shareholders have preemptive rights to maintain their proportional ownership, which could impair the company's ability to raise funds[223]. - The potential sale of a large number of Class A common shares may lead to a significant decline in their market price[224]. Operational Challenges - The company relies on manual processes for various operations, increasing the risk of errors and control deficiencies[156]. - The company must enhance its internal controls over financial reporting to comply with the Sarbanes-Oxley Act, with potential costs and management time implications[158]. - The company is dependent on its subsidiaries for operational funds and may face restrictions on payments and distributions due to financing arrangements[183].