DLocal's TPV Surges 51% Amid Revenue Miss

Digital payments specialist DLocal (NASDAQ:DLO) reported mixed fourth-quarter 2024 earnings on Thursday, Feb. 27. The company achieved a record gross profit and maintained solid growth in total payment volumes (TPV), increasing by a noteworthy 51% year over year. However, revenue at $204.5 million came up $1.5 million short of the $206 million projected, and adjusted earnings per share of $0.15 matched the consensus expectations.

Despite setbacks in profit margins, the overall quarter demonstrated substantial growth, especially in emerging markets.

Source: DLocal. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. TPV = Total payment volume. EBITDA = Earnings before interest, taxes, depreciation, and amortization.

DLocal’s Business Overview

DLocal facilitates cross-border payments, playing a critical role in the global fintech ecosystem. Its platform enables merchants to receive and make payments across diverse industries such as commerce, ride-hailing, and streaming, highlighting its versatility. The company’s focus areas include enhancing the functionality of its payments platform, expanding international reach, and optimizing efficiency through innovation.

Recently, DLocal has emphasized growing its presence in emerging markets and expanding industry coverage. Key factors for success include adhering to its growth strategy while managing costs effectively. The company's broad geographical reach minimizes location-specific risks, helping it capitalize on global digital payment trends.

Quarter Highlights and Financial Insights

DLocal's fourth quarter depicted robust performance in several metrics. Revenue increased 9% year over year while TPV of $7.7 billion registered a striking 51% year-over-year surge. DLocal’s platform served varied sectors, showing its adaptability and strength across numerous industries despite regional disparities. Key markets included Argentina and Egypt, though Brazil faced operational hurdles due to regulatory shifts, impacting processing strength.

Impressively, gross profit reached a record $83.7 million, marking a 20% increase. However, gross margins saw compression, declining from 1.4% to 1.1% of TPV, underlining pressures on profit and spending. Adjusted EBITDA of $56.9 million reflected a 16% year-over-year growth, despite historical increases in operating expenses. Challenges stem from elevated spending in technology and marketing, underlining the necessity for improved cost management.

As geographic performance varied, Latin America contributed substantially to revenue, driven by success in Argentina and Mexico. Yet, issues in Brazil due to regulatory changes proved challenging. Africa and Asia continued growth momentum, with South Africa and Egypt performing well against the backdrop of Nigerian currency devaluation.

Future Outlook and Guidance

Looking forward, DLocal management forecasts consistent growth with projected TPV increase between 35%-45% and revenue growth between 25%-35% in 2025. Despite ongoing net take rate compression pressures signaling some profit challenges, management is optimistic about sustaining growth. Its strategic focus remains on broadening market exposure, extending technological advancements, and navigating regulatory changes.

Strategic expansion remains on the agenda, with investments in technology and new markets. Close attention to cost management is emphasized along with capitalizing on fintech’s digital payment trends. As the payment landscape evolves, DLocal's capacity for innovation and adaptability will be critical as it strives to meet continued growth and investor expectations.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends DLocal and recommends the following options: long January 2027 $7 calls on DLocal and short January 2027 $10 calls on DLocal. The Motley Fool has a disclosure policy.