DLocal (US:DLO)2024-05-15 00:21Financial Data and Key Metrics Changes - The company reported a record quarterly Total Payment Volume (TPV) of $5.3 billion, representing a growth of nearly 50% year-on-year [41] - Revenue growth was over 30% year-on-year, but gross profit growth was flat, leading to a decline in adjusted EBITDA [42] - Adjusted EBITDA came in at $37 million, down 19% year-on-year and 25% quarter-on-quarter, with an adjusted EBITDA margin of 20%, down 6 percentage points quarter-on-quarter [33][42] Business Line Data and Key Metrics Changes - The cross-border business returned to 9% quarter-on-quarter growth, hitting a new record of $2.4 billion in TPV during Q1 [21] - The payout business grew by 17% quarter-on-quarter and over 50% year-on-year, driven by a strong ramp-up in remittance corridors [22] - Revenue in Brazil increased by 89% year-over-year, while Mexico saw a 50% increase [24] Market Data and Key Metrics Changes - Revenues in Argentina were down 31% year-over-year, primarily due to currency devaluation and a decline in TPV [49] - In Africa and Asia, revenue growth was driven by Egypt, South Africa, Turkey, and the Philippines, with Egypt's TPV up 71% year-over-year [25] - Revenues in Nigeria were down 74% sequentially due to devaluation and a 35% decline in TPV [28] Company Strategy and Development Direction - The company is focused on sustaining planned investment increases to support long-term growth, even amid current gross profit levels [20] - The growing portfolio of regulatory approvals is seen as a competitive advantage for navigating complex regulatory environments in emerging markets [23] - The company aims to diversify its merchant base over time to reduce dependency on the top 10 merchants [70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential despite short-term volatility, emphasizing the significant opportunities in emerging markets [89] - The company is tracking towards its 2024 objectives, albeit with a greater likelihood of coming in at the lower end of the guidance [61] - Management acknowledged the unpredictability of emerging markets but remains committed to delivering on its strategic plan [88] Other Important Information - The board authorized a share buyback program of up to $200 million, reflecting confidence in the company's capital allocation framework [34] - Operating expenses reached $36 million for the quarter, with a significant portion attributed to investments in technology and personnel [85] Q&A Session All Questions and Answers Question: Can you walk us through how to close the gap from 58% to 69% EBITDA to gross profit margin? - Management indicated that the most important part of closing the gap is the conversion of the existing pipeline to meet guidance [65] Question: What happened in Egypt, and how does the gross margin there compare to other markets? - Management noted that the Egyptian business benefited from wide FX spreads, but margins may tighten due to recent devaluation [73][99] Question: Are there any other significant merchant contract renewals that might impact gross profit guidance? - Management stated that they do not foresee similar renegotiations with other large merchants at this time, viewing the situation as isolated [123][124] Question: What are the reasons for the sequential decrease in revenues from Q4 to Q1? - Management explained that the decrease was primarily due to seasonality and the impact of a large merchant renegotiation [26][108] Question: Can you elaborate on the extra spending in the first quarter? - Management highlighted that the increased spending was focused on technology investments to accelerate product launches and enhance capabilities [130]