Core Thesis - DLocal Limited (DLO) is positioned as a critical infrastructure provider in the high-growth emerging markets payments space, with a strong growth trajectory and strategic expansion plans [2][5] Financial Performance - In Q2 2025, DLocal reported a total payment volume (TPV) of $9.2 billion, representing a 53% year-over-year increase, and revenue of $256.5 million, up 50% [3] - Adjusted EBITDA reached $70.1 million, up 64%, while free cash flow surged 156% year-over-year to $48.4 million [3] - Despite a 7% decline in net income due to a one-time foreign exchange impact from Argentina, the company has mitigated this risk by reducing peso exposure [3] Growth Projections - Following the strong Q2 performance, DLocal raised its guidance, expecting TPV growth of 40-50%, revenue growth of 30-40%, and EBITDA growth of 40-50% for FY25 [3] Strategic Initiatives - DLocal is enhancing its market position through the acquisition of AZA Finance, which expands operations into 17 additional African countries and improves treasury and FX management capabilities [4] - This acquisition helps mitigate currency risk and transforms FX exposure into a competitive advantage [4] Market Valuation - With a market cap around $4 billion and a forward P/E of 16, DLocal is trading at a valuation that suggests it is undervalued despite its strong growth metrics [4] - Conservative scenarios suggest potential share price increases to $25-28, while aggressive growth cases could see prices reach $32-36 [4] Competitive Positioning - DLocal's regulatory moat, established local partnerships, and licenses create significant barriers to entry, ensuring strong client retention [3][5] - The company's single API connects clients to various local payment systems, handling complex compliance across 40+ countries [2]