DLocal Limited (DLO) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with record high revenue, improved gross profit, and adjusted EBITDA. Despite potential risks, the company remains optimistic about future growth, particularly in Argentina and Brazil. The Q&A session supports this sentiment, with analysts showing confidence in growth prospects despite uncertainties. The company's market cap suggests a moderate reaction, leading to a positive stock price prediction.
Key Financial Performance
TPV (Total Payment Volume) $10.4 billion, representing significant growth of 59% year-over-year and 13% quarter-over-quarter. Growth was driven by remittances, e-commerce, on-demand delivery, and SaaS verticals. However, it was negatively impacted by the depreciation of the Argentine peso.
Gross Profit $103 million, up 32% year-over-year and 4% quarter-over-quarter. Growth was driven by volume increases in Brazil, Argentina, and Colombia, but offset by challenges in Egypt, Argentina, and Mexico due to factors like tariffs, cost pressures, and macroeconomic volatility.
Revenue $282 million, up 52% year-over-year and 10% quarter-over-quarter. Growth was driven by volume increases.
Adjusted EBITDA $72 million, up 37% year-over-year and 2% quarter-over-quarter. Growth was supported by disciplined expense management and operating leverage.
Net Income $52 million, driven by lower finance costs following a reduction in exposure to Argentine peso-denominated bonds.
Free Cash Flow $38 million for the quarter, reflecting the cash-generative nature of the business model.
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Operating Highlights
Buy Now, Pay Later Fuse: Launched in six countries with plans to expand to two more. It has shown 2.5x growth in volumes quarter-over-quarter, deployed via a revenue share model with no credit risk.
APMs-on-file capabilities: Expanded to cover 27 local payment methods across 16 countries, improving checkout conversion rates significantly, e.g., a 34 percentage point increase in Peru.
Emerging markets expansion: Strong growth in Brazil, Colombia, and other LatAm, Africa, and Asia segments. Local payment methods like Pix in Brazil now account for over half of e-commerce volume.
Crypto corridors: Emerging as a significant opportunity, with dLocal positioned as a key provider for stablecoin and fiat transactions across 40+ markets.
TPV growth: Achieved $10.4 billion, a 59% year-over-year increase, marking the fourth consecutive quarter of over 50% growth.
Gross profit: Reached $103 million, up 32% year-over-year, driven by volume growth in key markets like Brazil and Colombia.
Adjusted EBITDA: Recorded at $72 million, representing 70% of gross profit, showcasing disciplined expense management.
Merchant diversification: Top 3 markets are growing slower than others, reducing market concentration. Top 10 merchants' concentration is also decreasing over time.
Partnerships: Collaborated with Western Union, Bolt, Fireblocks, and Google to expand payment solutions and infrastructure.
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Risk or Challenges
Volatile macro situation in Argentina: The company faces challenges due to economic instability in Argentina, including currency depreciation and inflation adjustments, which have impacted financial results and increased costs.
Temporary cost pressure in Mexico: The company is experiencing margin pressure in Mexico due to a payment mix shift and increased tariffs on imports, which have slowed TPV growth in the region.
Share of wallet losses in Egypt: The company has faced a full quarter's effect of share of wallet losses in Egypt, impacting revenue and growth in the region.
Increased tariffs in Mexico: Recent tariff increases on low-value goods in Mexico have caused a slowdown in business operations and TPV growth.
Shifting fiscal and tax regimes in Brazil: Potential changes in fiscal and tax policies in Brazil pose a risk to the company's operations and financial performance in the region.
Currency devaluations and FX regime changes: The company is exposed to risks from potential currency devaluations and changes in foreign exchange regimes in markets like Egypt, Bolivia, and Argentina.
Noncash IFRS inflation adjustment in Argentina: The company has been impacted by noncash IFRS inflation adjustments in Argentina, adding to financial volatility.
Temporary margin pressure in Mexico: A payment mix shift in Mexico has led to temporary margin pressure, affecting profitability.
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Guidance & Outlook
TPV (Total Payment Volume): Expected to exceed the high end of the range shared during the second quarter '25 earnings call. Market share and merchant traction remain very strong.
Revenue: Tracking around the upper limit for the year.
Gross Profit and Adjusted EBITDA: Likely to be between the midpoint and the upper level of the guidance range.
Emerging Market Trends: Local payment methods are expected to account for nearly 60% of e-commerce volumes by 2027. Buy Now, Pay Later solutions are growing faster than the overall market and have significant potential. Crypto corridors through stablecoins are rapidly emerging, opening new business opportunities.
Product Innovation: Buy Now, Pay Later Fuse launched in 6 countries with plans to expand to 2 more shortly. APMs-on-file capabilities now cover 27 local payment methods across 16 countries, with rapid growth expected.
Macroeconomic Risks: Potential headwinds include increased tariffs in Mexico, shifting fiscal and tax regimes in Brazil, and potential currency devaluations or changes in FX regimes in markets like Egypt or Bolivia.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How much of Argentina was impacted by the uncertainty around the elections in September and October, and can potential growth in Argentina offset FX devaluation?
A:Argentina has seen a gradual pickup in total payment volume post-elections due to increased stability and predictability in the economy. While the market is bullish for Q4 in terms of volume growth, the FX situation remains uncertain and is being monitored closely. Longer-term signs are positive, and spread compressions that negatively affected Q3 gross profit have been repriced to improve spreads.
Q:How could the changing tax regimes in Brazil impact the business, particularly regarding taxes on funds outside of Brazil?
A:The specific tax mentioned does not affect the company as it does not apply to payment facilitators. Some payment structures could become more attractive for global merchants due to this tax. Overall, there is no anticipation of negative impacts from the Brazilian fiscal landscape in the next few quarters.
Q:If Argentina maintains its current crawling peg, is that more positive for the company? What happens if the currency floats?
A:If Argentina maintains the crawling peg, it is a positive outcome. If the currency floats, the impact depends on the extent of devaluation. Argentina represents only 12% of gross profit, and the company is seeing strong performance in other markets like Brazil and the rest of Latin America.
Q:Would the company have been affected by a higher tax rate on fintechs in Brazil if it had been passed?
A:The CEO did not know the answer to this question.
Q:What are the outsized drivers of growth in remittances and e-commerce verticals, and are there concerns about a slowdown due to tariffs, tax regimes, or tougher comparisons?
A:Remittances and e-commerce are key drivers of growth, with remittances growing over 200% year-on-year. Other verticals like streaming, SaaS, on-demand delivery, and ride-hailing are also growing strongly. There are no signs of alarm for these businesses, though natural deceleration may occur due to strong growth.
Q:What caused the 4 basis point headwind in the take rate, and is there a risk of aggressive discounting by competitors?
A:The 4 basis point headwind was due to a one-off factor and is not expected to continue. Aggressive discounting is common in Q4 for the payments industry during the peak shopping season, and the company also participates in this practice.
Q:What is driving the strong rebound in Brazil, and is it concentrated among specific clients?
A:The rebound in Brazil is broad-based, driven by growth in long-term global relationships, new client additions in 2024, and recent wins. Brazil has a higher share of cross-border merchants and better spreads compared to Mexico.
Q:What is the outlook for local-to-local growth and Buy Now, Pay Later (BNPL), and how do these impact take rates?
A:Cross-border volumes have remained stable, and local-to-local growth is not expected to significantly shift the mix. BNPL has shown strong initial interest and has the potential for higher take rates due to monetization of both merchants and credit originators.
Q:What is the significance of the 25 on-file alternative payment methods (APMs), and how do they differ from the broader suite of APMs?
A:The 25 on-file APMs are tokenized with added features to improve performance and merchant experience, making them more akin to credit cards. These are part of a broader strategy to capture the growing share of payments through local or alternative methods in emerging markets.
Q:What is the medium-term outlook for take rates, and what embedded finance products could offset pressure on take rates?
A:Take rates may face pressure due to factors like APMs, but embedded finance products like BNPL, card-present capabilities, stablecoins, and KYC as a service could offset this. These products aim to address merchant needs and expand financial infrastructure.
Q:Is the company entering the offline POS business with its card-present capabilities?
A:The company is not entering the offline POS business broadly but is targeting specific use cases where digital merchants need physical POS solutions, such as integration with ERPs for SMBs and restaurants.
Q:Review of Unclear Management Responses
A:The CEO did not provide a clear answer to whether the company would have been affected by a higher tax rate on fintechs in Brazil if it had been passed.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APM
Argentina
Brazil
Buy Pay
Egypt
Pay solution
TPV
basis merchant
commerce volume
complexity fragmentation
concentration
currency basis
dLocal
example
exposure peso
finance reduction
income finance
increase salary
market country
market infrastructure
method country
mix
payment infrastructure
payment method
peso bond
pressure Mexico
proposition merchant
ramp stablecoins
rate payment
record
reduction exposure
value proposition
volatility
DLO Transcript
DLocal Limited (DLO) Presents at J.P. Morgan 54th Annual Global Technology, Media and Communications Conference Transcript
Neutral5-20
DLocal Limited (DLO) Q1 2026 Earnings Call Transcript
Unknown5-14
The earnings call summary shows strong financial performance with significant revenue, gross profit, and net income growth, which are positive indicators. However, the absence of strategic initiatives, operational updates, and risk discussions limits insights into future prospects. Additionally, no new partnerships or guidance changes were mentioned, and the Q&A section provided no further clarity. Given the market cap of around $2.3 billion, the stock is likely to experience a neutral movement, as the positive financials are counterbalanced by the lack of forward-looking insights.
DLocal Limited (DLO) Q4 2025 Earnings Call Transcript
Positive3-18
The earnings call highlights strong financial performance, including significant growth in TPV, revenue, and net income. Despite some concerns about Argentina's FX volatility and G&A expenses, the company exhibits robust expansion plans and product innovation, such as the Buy Now, Pay Later Fuse and stablecoin adoption. The Q&A section reveals optimism about long-term growth and market expansion, particularly in Latin America, Africa, and Asia. The market cap of $2.36 billion suggests moderate stock price sensitivity. Overall, the positive financial results and strategic initiatives suggest a positive stock price movement of 2% to 8%.
DLocal Limited (DLO) Q3 2025 Earnings Call Transcript
Positive11-12
The earnings call highlights strong financial performance, with record high revenue, improved gross profit, and adjusted EBITDA. Despite potential risks, the company remains optimistic about future growth, particularly in Argentina and Brazil. The Q&A session supports this sentiment, with analysts showing confidence in growth prospects despite uncertainties. The company's market cap suggests a moderate reaction, leading to a positive stock price prediction.
DLO Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
