DLocal (DLO) - 2025 Q2 - Quarterly Report

Key Business Highlights dLocal achieved record TPV, revenue, gross profit, and adjusted EBITDA in Q2 2025, with strong year-over-year growth across all key metrics and improved operating leverage, leading to an upward revision of full-year 2025 guidance Summary of Q2 2025 Performance dLocal achieved record TPV, revenue, gross profit, and adjusted EBITDA in Q2 2025, with strong year-over-year growth across all key metrics, continuous improvement in operating leverage, and an upward revision of full-year 2025 guidance Key Financial Metrics for Q2 2025 | Metric | 2Q25 (million USD) | 2Q24 (million USD) | YoY Growth | 1Q25 (million USD) | QoQ Growth | YoY Growth (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TPV | 9,200 | 6,000 | +53% | 8,100 | +14% | +65% | | Revenue | 256 | 171 | +50% | 217 | +18% | +63% | | Gross Profit | 99 | 70 | +42% | 85 | +17% | +55% | | Adjusted EBITDA | 70 | 43 | +64% | 58 | +21% | - | | EBITDA | 61 | 34 | +79% | 51 | +20% | - | - Adjusted EBITDA as a percentage of gross profit reached 71%, marking the fifth consecutive quarter of growth and demonstrating sustained operating leverage[8] - Free cash flow remained strong at $48 million[9] - Full-year 2025 guidance for TPV, revenue, gross profit, and adjusted EBITDA was raised[9] Letter to Shareholders The CEO highlighted strong Q2 2025 growth and execution, with record TPV, revenue, and gross profit, alongside strategic diversification and capital reallocation to mitigate currency impacts CEO's Message The CEO emphasized strong Q2 2025 growth with record TPV, revenue, and gross profit, noting robust core market performance, faster growth in other regions, and strategic capital reallocation to mitigate currency impacts - TPV reached $9.2 billion, marking the third consecutive quarter of over 50% year-over-year growth[11] - Revenue and gross profit reached $256 million and $99 million respectively, both achieving new historical highs[11] - Net income for the quarter was $43 million, negatively impacted by the Argentine Peso devaluation on the bond portfolio, with over 80% of Argentine funds reallocated to US Treasuries[12] - Free cash flow for the quarter was $48 million, reflecting strong underlying operations[13] Strategic Growth Initiatives dLocal expanded its global footprint by securing new payment licenses in the UAE, Turkey, and the Philippines, focusing on increasing wallet share with existing merchants, attracting new ones, and entering new countries to capture market opportunities - Three new payment licenses/authorizations were obtained in the UAE, Turkey, and the Philippines, expanding the financial services license portfolio across the Global South[14] - Currently serving nearly 760 merchants, with the top 50 clients averaging operations in 11 countries and 48 payment methods, up from 8 countries and 35 payment methods 18 months prior[14] - Revenue from the top three markets decreased to 47% of total revenue (down 8 percentage points from 2023), while revenue from other markets grew almost three times faster[14] Corporate Governance and Capital Structure Changes The board is implementing significant changes, including a commitment to a majority independent board, establishing new committees, planning to cancel treasury shares, and appointing a new CFO and SVP of Corporate Development - Commitment to transition to a majority independent board, with the search for new independent directors already underway[18] - Establishment of a Nominating and Corporate Governance Committee and a Compensation Committee[18] - Cancellation of treasury shares currently on the balance sheet to return excess capital to shareholders[18] - Guillermo Lopez Perez appointed as the new Chief Financial Officer, and Christopher Stromeyer as Senior Vice President of Corporate Development and Head of Investor Relations[16][17] Tech Update dLocal continues to invest in product innovation, launching SmartPix in Brazil, expanding BNPL integrations across markets, and advancing stablecoin remittance solutions through strategic partnerships Product Innovation and Deployments dLocal continues to invest in product innovation, launching SmartPix in Brazil to enhance Pix payments, expanding "Buy Now, Pay Later" (BNPL) integrations in multiple markets without credit risk, and advancing stablecoin remittance solutions through a partnership with BVNK - Launched SmartPix in Brazil, a solution that redefines the Pix experience and replicates most card payment functionalities and conveniences for merchants[22] - Introduced "Buy Now, Pay Later" (BNPL) integrations in multiple markets, allowing merchants to benefit from significant credit demand without dLocal assuming credit risk[23] - Made progress in stablecoin solutions, solidifying its position as a perfect on-ramp and off-ramp provider for stablecoin participants and merchants through a partnership with BVNK[24] Business highlights dLocal achieved record TPV in Q2 2025, driven by strong pay-ins and cross-border transactions, with robust revenue growth across Latin America, Africa, and Asia, and high net revenue retention from existing merchants Total Payment Volume (TPV) Breakdown Q2 2025 TPV reached a record $9.2 billion, primarily driven by strong pay-ins and cross-border transactions, with significant contributions from verticals like commerce, on-demand delivery, and ride-hailing Q2 2025 TPV Breakdown by Product and Type | TPV Type | 2Q25 (million USD) | Share | 2Q24 (million USD) | Share | YoY Growth | 1Q25 (million USD) | QoQ Growth | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | By Product | | | | | | | | | Pay-ins | 6,395 | 69% | 4,273 | 71% | +50% | - | +18% | | Pay-outs | 2,816 | 31% | 1,763 | 29% | +60% | - | +6% | | By Flow | | | | | | | | | Cross-border | 4,719 | 51% | 2,701 | 45% | +75% | - | +11% | | Local to Local | 4,493 | 49% | 3,334 | 55% | +35% | - | +17% | | Total TPV | 9,212 | 100% | 6,035 | 100% | +53% | 8,100 | +14% | - Strong performance in Pay-ins TPV was primarily driven by verticals such as commerce, on-demand delivery, ride-hailing, SaaS, and streaming[28] - Quarter-over-quarter growth in Cross-border TPV was driven by verticals including commerce, SaaS, remittances, and ride-hailing across various markets[29] Revenue by Geography and Merchant Type Latin America contributed 79% of total revenue with 46% YoY growth, while Africa and Asia grew 65% YoY, and existing merchants showed strong expansion with a 145% Net Revenue Retention (NRR) Q2 2025 Revenue Breakdown by Geography | Geography | 2Q25 (million USD) | Share | 2Q24 (million USD) | Share | YoY Growth | QoQ Growth | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Latin America | 202.7 | 79% | 138.7 | 81% | +46% | +24% | | - Brazil | 47.0 | 18% | 42.3 | 25% | - | - | | - Argentina | 31.6 | 12% | 20.5 | 12% | - | - | | - Mexico | 45.7 | 18% | 35.8 | 21% | - | - | | - Other LatAm | 78.4 | 31% | 40.1 | 23% | - | - | | Africa & Asia | 53.7 | 21% | 32.6 | 19% | +65% | 0% | | - Egypt | 17.6 | 7% | 15.0 | 9% | - | - | | - Other Africa & Asia | 36.1 | 14% | 17.5 | 10% | - | - | | Total Revenue | 256.5 | 100% | 171.3 | 100% | +50% | +18% | - Revenue from existing merchants grew 54% year-over-year, with a Net Revenue Retention (NRR) of 145%, indicating strong growth from existing merchant expansion[31] - New merchant revenue contributed significantly, primarily from commerce, streaming, and remittances verticals[35] Gross Profit by Geography Latin America accounted for 74% of total gross profit with 37% YoY growth, driven by transaction volume and favorable payment mix in Brazil and Argentina, while Africa and Asia gross profit grew 56% YoY despite an Egyptian impact Q2 2025 Gross Profit Breakdown by Geography | Geography | 2Q25 (million USD) | Share | 2Q24 (million USD) | Share | YoY Growth | QoQ Growth | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Latin America | 73.6 | 74% | 53.5 | 77% | +37% | +24% | | - Brazil | 24.3 | 25% | 19.2 | 28% | - | - | | - Argentina | 14.1 | 14% | 7.6 | 11% | - | - | | - Mexico | 11.9 | 12% | 8.8 | 13% | - | - | | - Other LatAm | 23.4 | 24% | 17.9 | 26% | - | - | | Africa & Asia | 25.3 | 26% | 16.3 | 23% | +56% | 0% | | - Egypt | 12.9 | 13% | 9.8 | 14% | - | - | | - Other Africa & Asia | 12.4 | 13% | 6.5 | 9% | - | - | | Total Gross Profit | 98.9 | 100% | 69.8 | 100% | +42% | +17% | - Quarter-over-quarter growth in Latin America's gross profit was primarily driven by increased transaction volumes and a favorable payment mix in Brazil and Argentina[33] - Quarter-over-quarter growth in Africa and Asia's gross profit was negatively impacted by Egypt, but excluding Egypt, it grew by $3 million, primarily due to strong performance in markets like South Africa[34][41] Financial highlights dLocal achieved strong Q2 2025 financial performance with significant YoY growth in TPV, revenue, gross profit, operating profit, and adjusted EBITDA, though net income decreased due to currency depreciation and fund reallocation Key Financial Metrics dLocal demonstrated strong Q2 2025 financial performance with significant year-over-year growth across TPV, revenue, gross profit, operating profit, adjusted EBITDA, and EBITDA, while net income decreased due to currency depreciation and fund reallocation Key Financial Metrics for Q2 2025 | Metric | 2Q25 (million USD) | 2Q24 (million USD) | YoY Change | 1Q25 (million USD) | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | TPV | 9,212 | 6,035 | +53% | 8,100 | +14% | | Revenue | 256.5 | 171.3 | +50% | 216.8 | +18% | | Gross Profit | 98.9 | 69.8 | +42% | 84.9 | +17% | | Gross Profit Margin | 39% | 41% | -2p.p | 39% | 0p.p | | Operating Profit | 55.8 | 30.2 | +85% | 45.8 | +22% | | Adjusted EBITDA | 70.1 | 42.7 | +64% | 57.9 | +21% | | Adjusted EBITDA Margin | 27% | 25% | +2p.p | 27% | 0p.p | | Adjusted EBITDA/Gross Profit | 71% | 61% | +10p.p | 68% | +3p.p | | Net Income | 42.8 | 46.2 | -7% | 46.7 | -8% | | Diluted EPS | 0.14 | 0.15 | - | 0.15 | - | | Free Cash Flow | 48.4 | 19.0 | +156% | 39.7 | +22% | - Net financial result was a $3.8 million loss, compared to a $28 million gain in Q2 2024, primarily due to the negative impact of Argentine Peso depreciation on the bond portfolio[41] - As of June 30, 2025, dLocal held $476.9 million in cash and cash equivalents, with $253.8 million in corporate cash and cash equivalents[43] 2025 Guidance Update dLocal raised its full-year 2025 guidance for TPV, revenue, gross profit, and adjusted EBITDA, reflecting strong first-half performance and anticipated continued growth momentum, while also highlighting potential risks from macroeconomic changes and currency depreciation 2025 Guidance Update | Metric | Original 2025 Guidance (YoY) | New 2025 Guidance Range (YoY) | | :--- | :--- | :--- | | TPV | 35% - 45% | 40% - 50% | | Revenue | 25% - 35% | 30% - 40% | | Gross Profit | 20% - 25% | 27.5% - 37.5% | | Adjusted EBITDA | 20% - 30% | 40% - 50% | - Potential risks highlighted by the company include changes in global macroeconomic, monetary, and trade landscapes affecting emerging markets; recent tariff increases in Mexico and potential trade barriers in other markets; changes in Brazil's fiscal regime; and the potential impact of currency depreciation and/or foreign exchange regime changes in Argentina and Egypt[44][47] Appendix This section provides definitions for key operational metrics, reconciliations for non-IFRS measures, earnings per share calculations, consolidated financial statements, and company information with forward-looking statements Definition of selected operational metrics This section defines key operational metrics used by dLocal, including API, cross-border payments, local payment methods, local-to-local payments, Net Revenue Retention (NRR), pay-ins, pay-outs, new merchant revenue, existing merchant revenue, and Total Payment Volume (TPV) - API: Application Programming Interface, used by software developers to integrate with specific services or applications[69] - Cross-border Payments: Payment transactions where dLocal collects funds in one currency and settles in a different currency and/or geographic location[70] - Net Revenue Retention (NRR): Measures the retention and growth of dLocal's merchants, calculated by dividing revenue from all customers in the current period/year by revenue from the same customers in the prior period/year[72] - TPV: Total Payment Volume, referring to the total value of all payments successfully processed through dLocal's payment platform[75] Reconciliation of Non-IFRS Measures This section details the definitions and reconciliations for Adjusted EBITDA, Adjusted Net Income, and constant currency metrics (TPV, revenue, gross profit), noting that dLocal considers Adjusted EBITDA an IFRS measure per IFRS 8, while others are non-IFRS - Adjusted EBITDA is defined as operating profit before depreciation, amortization, financial income and costs, impairment loss/gain on financial assets, transaction costs, non-cash share-based payment expenses, other operating gains/losses, other non-recurring costs, and inflation adjustment[49] Adjusted EBITDA Reconciliation (Q2 2025) | Item | 2025 Q2 (thousand USD) | | :--- | :--- | | Profit for the period | 42,808 | | Income tax expense | 8,188 | | Depreciation and amortization | 5,540 | | Financial income and costs, net | 3,785 | | Non-cash share-based payment expenses | 4,911 | | Other operating losses | 2,480 | | Impairment loss/(gain) on financial assets | 1,415 | | Inflation adjustment | 984 | | Adjusted EBITDA | 70,111 | Constant Currency Metrics Reconciliation (Q2 2025 vs Q2 2024) | Metric | 2Q25 (Reported) | 2Q24 (Reported) | YoY Change (Reported) | 2Q25 (Constant Currency) | 2Q24 (Constant Currency) | YoY Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | TPV | 9,212 | 6,035 | 53% | 9,960 | 6,035 | 65% | | Revenue | 256 | 171 | 50% | 279 | 171 | 63% | | Gross Profit | 99 | 70 | 42% | 108 | 70 | 55% | Earnings per share This section explains the calculation of basic and diluted earnings per share, based on profit attributable to group owners and weighted average ordinary shares, including adjustments for dilutive potential ordinary shares Earnings Per Share Calculation (Q2 2025) | Item | 2025 Q2 | | :--- | :--- | | Profit attributable to ordinary shareholders (USD) | 42,810,218 | | Weighted average number of ordinary shares | 289,578,429 | | Adjustments for calculation of diluted EPS | 11,543,051 | | Weighted average number of ordinary shares for diluted EPS | 301,121,480 | | Basic EPS | 0.15 | | Diluted EPS | 0.14 | Consolidated Financial Statements This section presents dLocal's unaudited consolidated statements of comprehensive income, financial position, and cash flows for the three and six months ended June 30, 2025, and 2024, detailing the company's financial performance and health Consolidated Statement of Comprehensive Income Summary (Q2 2025 vs Q2 2024) | Item (thousand USD) | 2025 Q2 | 2024 Q2 | | :--- | :--- | :--- | | Revenue | 256,458 | 171,279 | | Cost of sales | (157,573) | (101,468) | | Gross profit | 98,885 | 69,811 | | Operating profit | 55,765 | 30,195 | | Profit before tax | 50,996 | 56,299 | | Profit for the period | 42,808 | 46,239 | | Total comprehensive income for the period | 47,111 | 40,635 | Consolidated Statement of Financial Position Summary (As of June 30, 2025 vs June 30, 2024) | Item (thousand USD) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total current assets | 1,120,364 | 1,118,920 | | Total non-current assets | 100,948 | 76,764 | | Total Assets | 1,221,312 | 1,195,684 | | Total current liabilities | 766,517 | 747,877 | | Total non-current liabilities | 6,615 | 5,405 | | Total Liabilities | 773,132 | 753,282 | | Total equity attributable to owners of the Group | 447,960 | 442,287 | | Total Equity | 448,180 | 442,402 | Consolidated Statement of Cash Flows Summary (Q2 2025 vs Q2 2024) | Item (thousand USD) | 2025 Q2 | 2024 Q2 | | :--- | :--- | :--- | | Net cash generated from operating activities | 124,459 | 28,808 | | Net cash used in investing activities | (10,493) | 2,894 | | Net cash used in financing activities | (150,520) | (82,837) | | Net increase/(decrease) in cash and cash equivalents | (36,554) | (51,135) | | Cash and cash equivalents at end of period | 476,939 | 531,620 | Company Information and Forward-Looking Statements This section provides details for the conference call and webcast, an overview of dLocal's business as an emerging markets payment platform, and a cautionary note regarding forward-looking statements, emphasizing inherent risks and uncertainties - dLocal powers local payments in emerging markets through its "One dLocal" platform (one direct API, one platform, and one contract), connecting global enterprise merchants with billions of emerging market consumers across 40+ countries in Africa, Asia, and Latin America[82] - Forward-looking statements, including guidance, are based on management's current expectations and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed[84][85] - dLocal undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[86]