DLocal Limited (“dLocal”, “we”, “us”, and “our”) (NASDAQ:DLO), a
technology - first payments platform today announced its financial
results for the third quarter ended September 30, 2024.
We are encouraged by how we see the business
evolving. After a soft first quarter, we see ourselves consistently
gaining momentum. Despite a tough 2023 comparison, we have once
again returned to delivering a quarter of record results in Total
Payment Volume and Gross Profit. Our margins, cash position, and
cash conversion have all improved quarter after quarter throughout
2024. A year that started off admittedly weak, has gained positive
momentum.
We continue to deliver significant growth, with
TPV re-accelerating to over 40% year-over-year, driven by our
continued ability to expand our share of wallet of our existing
global merchant base, and onboard new merchants. Our performance
this quarter was strong across diverse verticals, countries and
products, notably:
- We ramped up operations in more countries, offered more
payment methods and gained share of wallet across important logos
in the financial services, SaaS, on demand delivery, advertising,
ride-hailing and commerce verticals.
- We increased payments volume in Argentina, Mexico, Egypt and
Other Latam - mainly in Colombia and Peru - as well as Other Africa
and Asia, with strong performance in South Africa.
- We reported record volume in our higher take rate cross-border
(XB) business, surpassing the $3 billion quarterly mark in flows
for the first time.
Our pipeline remains robust, including both
growth opportunities with existing merchants as well as new
merchants. During the period, we successfully integrated major
players, including MoneyGram, one of the largest global providers
of money transfer and payment services, and other significant
remittance companies to serve them across countries in Latam,
Africa and Asia. We also continued to ramp up volumes with one of
the main Asian commerce players, expanding the regions in which we
serve them, and have now gone live in Brazil with one of the
largest global Fintech companies, out of Asia.
Moving on to profitability, this quarter’s
results showcase the resilience of our business model. We reached
record gross profit of $78 million with net take rate stable at
1.2% since Q1 2024. This is a consequence of our differentiated
value proposition, continuous pursuit of cost efficiencies, and the
real value in solving complexities across emerging markets for our
global merchants, which grants pricing power and differentiates
from more commoditized payments offerings in the developed world.
We achieve those results despite weakness in most emerging market
currencies.
Our Adjusted EBITDA reached $52 million, despite
continued investments in our engineering team, back-office
capabilities and our license portfolio, all crucial for our
long-term success. Although Adjusted EBITDA was down
year-over-year, this represents the second consecutive quarter of
increased operational leverage, with adjusted EBITDA over gross
profit margin now at 67%. This demonstrates the operational
leverage inherent in our business model, general philosophy of
expense control and disciplined investment to deliver our long-term
growth ambitions.
Cash generation, another strength of our
financial model, was also solid. During the past 3 months we had
net cash from operating activities, excluding merchant funds, less
CAPEX amounting to $26 million, a cash conversion of practically
100% of Net Income.
On that note, our guidance remains unchanged in
light of our Q3 2024 results and what we have seen through Q4.
However, it is important to reinforce that Q4 results are heavily
weighted towards the next 3-4 weeks, given the expected seasonal
lift in commerce volumes and Black Friday.
In terms of technology and product development
deployments during the quarter, we have launched our Smart Requests
functionality, boosting our transaction performance, thereby
improving conversion rate. We have also continued to develop
increasingly advanced real-time cost calculation models to optimise
processing costs, which also contributed to our gross profit
achievement and stable net take rate.
A third area of innovation has been our launch
of new and promising alternative payment methods (APM), with the
successful deployment of integrations with Nupay in Brazil for
global merchants.
Finally, we launched a new product to our suite
of offerings, a stand alone Payment Orchestration option, which
allows merchants to retain our Smart Routing, fraud detection, and
unified reporting, while obtaining their own licenses and
contracting directly with processors in each market. Although this
model may result in a lower net take rate net of acquiring costs,
it enhances our ability to capture share of wallet with relevant
clients, and continues to add value to merchants through our single
API connection and product functionalities, while delivering
optimized conversion and cost results.
These improvements to our platform, as well as
the development of new solutions, serve to deepen our competitive
advantages in our markets, enhance the stickiness of our products,
and potentially bring future revenue streams - all important
pillars to our long-term growth opportunities.
As a reminder, dLocal is a young and dynamic
company, less than eight years old, and yet, during this period, it
has delivered extraordinary growth. We have expanded our roster of
sophisticated enterprise merchants, increased our share of wallet
with them, and built operations across the most relevant emerging
markets globally, adding products, new APMs and licenses over these
years.
Our growth underscores our success in serving
and supporting these most demanding digital merchants with tailored
solutions that meet their evolving needs. We navigate the highly
complex and changing payment landscape and regulatory environments
across emerging markets with one of the most complete emerging
market processing ecosystems. The comprehensiveness of our One
dLocal solution allows our merchants to add new markets and payment
methods at a marginal incremental implementation cost, providing
cost-efficient and speedy geographic expansion. This value supports
the resilience of our business, despite operating in the volatile
global south.
Secular trends also favour us. We have a huge
and growing TAM underpinned by shifts towards payment
digitalization, the growing importance of emerging and frontier
markets, and surging demand for cross-border and instant payment
methods. Industry forecasts predict the retail cross-border
payments market will reach $65 trillion by 20301, and we are
well-positioned to be capturing a reasonable portion of the growth
in this immense addressable market. Our ability to innovate and
capitalize on these trends, coupled with our financial model
characterized by operational leverage and high cash conversion,
will fuel long-term value creation for our shareholders and
merchants. We are just beginning to realize the compounding nature
of this strategy, and we remain steadfast in our mission to deliver
on this promise, in all the relevant geographies that our merchants
present needs.
Thank you to those who have shown us continued
support and confidence. We look forward to updating you on our
progress in the coming quarters.
Third quarter 2024 Financial
Highlights
- Total Payment Volume (“TPV”)
reached a record US$6.5 billion in the third quarter, up 41%
year-over-year compared to US$4.6 billion in the third quarter of
2023 and up 8% compared to US$6.0 billion in the second quarter of
2024.
- Revenues amounted to US$185.8
million, up 13% year-over-year compared to US$163.9 million in the
third quarter of 2023 and up 8% compared to US$171.3 million in the
second quarter of 2024. This quarter-over-quarter increase was
mostly driven by the performance in Argentina and Egypt, as well as
the positive results in Other Latam and Other Africa and Asia.
- Gross profit was US$78.2 million in
the third quarter of 2024, up 5% compared to US$74.5 million in the
third quarter of 2023 and up 12% compared to US$69.8 million in the
second quarter of 2024. The improvement in gross profit
quarter-over-quarter was primarily due to volume growth in Egypt,
South Africa, Mexico and Other Latam markets. These positive
factors were partially offset by (i) Brazil, given the share losses
on credit card payments of a top merchant, as they were granted a
payment license and were required to connect directly with
acquirers in order to remain compliant; and (ii) Argentina, as we
had higher expatriation costs.
- As a result, gross profit margin
was 42% in this quarter, compared to 45% in the third quarter of
2023 and 41% in the second quarter of 2024.
- Gross profit over TPV was at 1.2%
decreasing from 1.6% in the third quarter of 2023 and stable
compared to the second quarter of 2024.
- Operating income was US$41.1
million, down 20% compared to US$51.5 million in the third quarter
of 2023 and up 36% compared to US$30.2 million in the second
quarter of 2024, a result of re-ignited growth and cost management.
In this context, operating expenses grew by 61% year-over-year,
with most of the growth allocated to Product Development & IT
capabilities, with the Technology and development expenses
increasing by 88% year-over-year while Sales and Marketing expenses
and General and Administrative expenses grew by 35%. On the
sequential comparison, operating expenses decreased 6%
quarter-over-quarter, a reflection of our continued disciplined
approach to expense management.
- As a result, Adjusted EBITDA was
US$52.4 million , down 6% compared to US$55.6 million in the third
quarter of 2023 and up 23% compared to US$42.7 million in the
second quarter of 2024.
- Adjusted EBITDA margin was 28%,
compared to the 34% recorded in the third quarter of 2023 and 25%
in the second quarter of 2024. On the annual comparison, the
decrease is explained by the long-term investments, as mentioned
since previous quarters. Following the same trend, Adjusted EBITDA
over gross profit of 67% decreased compared to 75% in the third
quarter of 2023 and increased compared to 61% in the second quarter
of 2024.
- Net financial cost was US$10.1
million, compared to a finance income of US$1.5 million in the
third quarter of 2023 and US$28.0 million in the second quarter of
2024, as explained in the Net Income section.
- Our effective income tax rate
decreased to 8% from 18% last quarter, primarily driven by lower
pre tax income in Argentina. On a year-to-date basis, our effective
tax rate stands at 18%.
- Net income for the third quarter of
2024 was US$26.8 million, or US$0.09 per diluted share, down 34%
compared to a profit of US$40.4 million, or US$0.13 per diluted
share, for the third quarter of 2023 and down 42% compared to a
profit of US$46.2 million, or US$0.15 per diluted share for the
second quarter of 2024. During the current period, net income was
mostly impacted by the (i) positive US$23 million non-cash mark to
market effect related to the Argentine bond investments in the
second quarter of 2024, as mentioned last quarter; and (ii) higher
finance costs this quarter mainly driven by exchange differences
and higher cost of hedges. Adjusted net income for the third
quarter of 2024 was US$43.4 million, down 12% compared to US$49.2
million for the third quarter of 2023 and down 5% compared to
US$45.6 million for the second quarter of 2024.
- As of September 30, 2024, dLocal
had US$560.5 million in cash and cash equivalents, including
US$208.0 million of own funds and US$352.5 million of merchants’
funds. The consolidated cash position increased by US$62.4 million
from US$498.2 million as of September 30, 2023. When compared to
the US$531.6 million cash position as of June 30, 2024, it
increased by US$28.9 million.
The following table summarizes our key performance metrics:
| |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
2023 |
% change |
2024 |
2023 |
% change |
| Key
Performance metrics |
(In millions of US$ except for %) |
| TPV |
6,516 |
4,618 |
41% |
17,861 |
12,566 |
42% |
| Revenue |
185.8 |
163.9 |
13% |
541.5 |
462.3 |
17% |
| Gross Profit |
78.2 |
74.5 |
5% |
211.0 |
207.1 |
2% |
| Gross Profit margin |
42% |
45% |
-3p.p |
39% |
45% |
-6p.p |
| Adjusted EBITDA |
52.4 |
55.6 |
-6% |
131.8 |
153.1 |
-14% |
| Adjusted EBITDA margin |
28% |
34% |
-6p.p |
24% |
33% |
-9p.p |
| Adjusted EBITDA/Gross Profit |
67% |
75% |
-8p.p |
62% |
74% |
-11p.p |
| Profit |
26.8 |
40.4 |
-34% |
90.8 |
120.6 |
-25% |
| Profit margin |
14% |
25% |
-10p.p |
17% |
26% |
-9p.p |
| |
|
|
|
|
|
|
Third quarter 2024 Business Highlights
- During the third quarter of 2024,
pay-ins TPV increased 35% year-over-year and 8%
quarter-over-quarter to US$4.6 billion, accounting for 71% of the
TPV.
- Pay-outs TPV increased by 58%
year-over-year and 7% quarter-over-quarter to US$1.9 billion,
accounting for the remaining 29% of the TPV.
- Cross-border TPV increased by 35%
year-over-year and 12% quarter-over-quarter to US$3.0 billion.
Cross-border volume accounted for 47% of the TPV in the third
quarter of 2024.
- Local-to-local TPV increased by 47%
year-over-year and 4% quarter-over-quarter to US$3.5 billion.
Local-to-local volume accounted for 53% of the TPV in the third
quarter of 2024.
- LatAm revenue increased 7%
year-over-year to US$145.2 million, accounting for 78% of total
revenue. On the annual comparison, the growth was primarily driven
by commerce and financial services in Mexico, and strong
performance of Other LatAm, particularly in Colombia. Sequentially,
LatAm revenue grew by 5% mainly driven by the performance of
Argentina and Other LatAm.
- In the Africa and Asia region,
revenue increased by 45% year-over-year, primarily driven by strong
growth performance in Egypt; and in Other Africa and Asia,
particularly the performance in South Africa in the commerce
vertical. Those regions are also the main drivers of the sequential
increase.
- LatAm gross profit decreased by 6%
year-over-year and increased by 4% quarter-over-quarter to US$55.6
million, accounting for 71% of total gross profit. Most of the
year-over-year decline is explained by (i) Argentina, due to lower
FX spreads following the currency devaluation in December 2023; and
(ii) Brazil, given the repricing with our largest merchant which
occurred in the first quarter of 2024 and share losses on credit
cards, as explained before. Both effects were partially offset by
Mexico, due to volume growth and lower processing costs from
renegotiations with processors in the first quarter of 2024.
Sequentially, the growth was mainly driven by Mexico and Other
Latam markets, where we experienced around US$2 million from
widening FX spreads, that may eventually fade away in the case of
currencies devaluation. These positive factors were partially
offset by (i) Brazil, as previously explained; and (ii) Argentina,
as we had higher expatriation costs.
- Africa and Asia gross profit
increased by 49% year-over-year to US$22.6 million, accounting for
the remaining 29% of total gross profit. This annual comparison is
explained by our overall growth in Egypt and ramp-up of our
commerce merchants in South Africa. Sequentially, gross profit
increased by 39%, attributable to the same factors just discussed
in the year-over-year comparison.
- During the quarter, Revenue from
Existing Merchants reached US$179.9 million compared to US$ 161.7
million in the second quarter of 2024. On the annual comparison,
Revenue from Existing Merchants increased by 14% and the net
revenue retention rate, or NRR, reached 110%.
- Revenue from New Merchants
accounted for US$5.8 million in the third quarter of 2024 compared
to US$6.7 million in the same quarter of the prior year.
The tables below present the breakdown of dLocal’s TPV by
product and type of flow:
| In millions of
US$ except for % |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
% share |
2023 |
% share |
2024 |
% share |
2023 |
% share |
| Pay-ins |
4,632 |
71% |
3,429 |
74% |
12,561 |
70% |
9,122 |
73% |
| Pay-outs |
1,884 |
29% |
1,189 |
26% |
5,300 |
30% |
3,444 |
27% |
| Total TPV |
6,516 |
100% |
4,618 |
100% |
17,861 |
100% |
12,566 |
100% |
| In millions of
US$ except for % |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
% share |
2023 |
% share |
2024 |
% share |
2023 |
% share |
| Cross-border |
3,035 |
47% |
2,256 |
49% |
8,163 |
46% |
6,435 |
51% |
| Local-to-local |
3,480 |
53% |
2,362 |
51% |
9,699 |
54% |
6,131 |
49% |
| Total TPV |
6,516 |
100% |
4,618 |
100% |
17,861 |
100% |
12,566 |
100% |
| |
|
|
|
|
|
|
|
|
The tables below present the breakdown of dLocal’s revenue by
geography:
| In millions of
US$ except for % |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
% share |
2023 |
% share |
2024 |
% share |
2023 |
% share |
| Latin America |
145.2 |
78% |
136.0 |
83% |
409.3 |
76% |
361.2 |
78% |
| Brazil |
32.9 |
18% |
44.7 |
27% |
118.3 |
22% |
108.8 |
24% |
| Argentina |
26.0 |
14% |
23.9 |
15% |
60.3 |
11% |
64.6 |
14% |
| Mexico |
38.9 |
21% |
30.2 |
18% |
108.8 |
20% |
81.3 |
18% |
| Chile |
13.0 |
7% |
12.4 |
8% |
37.7 |
7% |
40.8 |
9% |
| Other LatAm |
34.3 |
18% |
24.8 |
15% |
84.3 |
16% |
65.7 |
14% |
| |
|
|
|
|
|
|
|
|
| Africa & Asia |
40.6 |
22% |
27.9 |
17% |
132.2 |
24% |
101.2 |
22% |
| Nigeria |
2.1 |
1% |
8.3 |
5% |
10.4 |
2% |
55.6 |
12% |
| Egypt |
18.6 |
10% |
10.1 |
6% |
72.6 |
13% |
18.3 |
4% |
| Other Africa & Asia |
19.9 |
11% |
9.4 |
6% |
49.2 |
9% |
27.3 |
6% |
| |
|
|
|
|
|
|
|
|
| Total Revenue |
185.8 |
100% |
163.9 |
100% |
541.5 |
100% |
462.3 |
100% |
| |
|
|
|
|
|
|
|
|
The tables below present the breakdown of dLocal’s gross profit
by geography:
| In millions of
US$ except for % |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
% share |
2023 |
% share |
2024 |
% share |
2023 |
% share |
| Latin America |
55.6 |
71% |
59.4 |
80% |
157.7 |
75% |
174.0 |
84% |
| Brazil |
15.4 |
20% |
22.7 |
30% |
52.5 |
25% |
53.3 |
26% |
| Argentina |
6.7 |
9% |
13.1 |
18% |
19.5 |
9% |
44.8 |
22% |
| Mexico |
12.8 |
16% |
7.9 |
11% |
31.6 |
15% |
25.4 |
12% |
| Chile |
8.2 |
10% |
6.9 |
9% |
23.9 |
11% |
24.9 |
12% |
| Other LatAm |
12.5 |
16% |
8.9 |
12% |
30.2 |
14% |
25.6 |
12% |
| |
|
|
|
|
|
|
|
|
| Africa & Asia |
22.6 |
29% |
15.1 |
20% |
53.2 |
25% |
33.2 |
16% |
| Nigeria |
1.7 |
2% |
1.7 |
2% |
4.2 |
2% |
4.3 |
2% |
| Egypt |
12.3 |
16% |
9.6 |
13% |
32.4 |
15% |
16.6 |
8% |
| Other Africa & Asia |
8.5 |
11% |
3.7 |
5% |
16.6 |
8% |
12.2 |
6% |
| |
|
|
|
|
|
|
|
|
| Total Gross Profit |
78.2 |
100% |
74.5 |
100% |
211.0 |
100% |
207.1 |
100% |
| |
|
|
|
|
|
|
|
|
Special note regarding Adjusted EBITDA and Adjusted
EBITDA Margin
dLocal has only one operating segment. dLocal
measures its operating segment’s performance by Revenues, Adjusted
EBITDA and Adjusted EBITDA Margin, and uses these metrics to make
decisions about allocating resources.
Adjusted EBITDA as used by dLocal is defined as
the profit from operations before financing and taxation for the
year or period, as applicable, before depreciation of property,
plant and equipment, amortization of right-of-use assets and
intangible assets, and further excluding the changes in fair value
of financial assets and derivative instruments carried at fair
value through profit or loss, impairment gains/(losses) on
financial assets, transaction costs, share-based payment non-cash
charges, secondary offering expenses, and inflation adjustment.
dLocal defines Adjusted EBITDA Margin as the Adjusted EBITDA
divided by consolidated revenues.
Although Adjusted EBITDA and Adjusted EBITDA
Margin may be commonly viewed as non-IFRS measures in other
contexts, pursuant to IFRS 8, (“Operating Segments”), Adjusted
EBITDA and Adjusted EBITDA Margin are treated by dLocal as IFRS
measures based on the manner in which dLocal utilizes these
measures. Nevertheless, dLocal’s Adjusted EBITDA and Adjusted
EBITDA Margin metrics should not be viewed in isolation or as a
substitute for net income for the periods presented under IFRS.
dLocal also believes that its Adjusted EBITDA and Adjusted EBITDA
Margin metrics are useful metrics used by analysts and investors,
although these measures are not explicitly defined under IFRS.
Additionally, the way dLocal calculates operating segment’s
performance measures may be different from the calculations used by
other entities, including competitors, and therefore, dLocal’s
performance measures may not be comparable to those of other
entities.
The table below presents a reconciliation of
dLocal’s Adjusted EBITDA to net income:
| $ in
thousands |
Three months ended 30 of September |
Nine months ended 30 of September |
|
|
2024 |
2023 |
2024 |
2023 |
| Profit for the period |
26,811 |
40,364 |
90,768 |
120,605 |
| Income tax expense |
2,286 |
8,897 |
19,460 |
21,952 |
| Depreciation and amortization |
4,438 |
3,237 |
12,289 |
8,621 |
| Finance income and costs, net |
10,085 |
(1,548) |
(18,259) |
(10,398) |
| Share-based payment non-cash charges |
6,204 |
3,322 |
17,441 |
7,072 |
| Other operating loss¹ |
578 |
- |
3,950 |
- |
| Impairment loss / (gain) on financial assets |
8 |
(2,508) |
(93) |
(2,478) |
| Inflation adjustment |
1,954 |
3,817 |
6,263 |
6,497 |
| Other non-recurring costs |
- |
- |
- |
1,229 |
| Adjusted EBITDA |
52,364 |
55,581 |
131,819 |
153,100 |
| |
|
|
|
|
Note: ¹The company wrote-off certain amounts
related to merchants/processors off-boarded by dLocal.
Special note regarding Adjusted Net Income
Adjusted Net Income is a non-IFRS financial
measure. As used by dLocal, Adjusted Net Income is defined as the
profit for the period (net income) excluding impairment
gains/(losses) on financial assets, transaction costs, share-based
payment non-cash charges, and other operating (gain)/loss, in line
with our Adjusted EBITDA calculation (see detailed methodology for
Adjusted EBITDA on page 13). It further excludes the accounting
non-cash charges related to the fair value gain from the Argentine
dollar-linked bonds, the exchange difference loss from the
intercompany loan denominated in USD that we granted to our
Argentine subsidiary to purchase the bonds, and the hedging cost
associated with the Argentina treasury notes. In addition, it
excludes the inflation adjustment based on IFRS rules for
hyperinflationary economies. We believe Adjusted Net Income is a
useful measure for understanding our results of operations while
excluding certain non-cash effects such as currency devaluation,
inflation, and hedging costs. Our calculation for Adjusted Net
Income may differ from similarly-titled measures presented by other
companies and should not be considered in isolation or as a
replacement for our measure of profit for the period as presented
in accordance with IFRS.
The table below presents a reconciliation of
dLocal’s Adjusted net income:
| $ in
thousands |
Three months ended 30 of September |
Nine months ended 30 of September |
|
|
2024 |
2023 |
2024 |
2023 |
| Net income as reported |
26,811 |
40,364 |
90,768 |
120,605 |
| Inflation adjustment |
1,954 |
3,817 |
6,263 |
6,497 |
| Loan - exchange difference |
7,710 |
27,351 |
20,270 |
29,166 |
| Argentina Treasury Notes
Hedging Costs |
4,272 |
- |
4,272 |
- |
| Fair value (loss) / gains of financial assets at FVTPL |
95 |
(24,232) |
(33,494) |
(27,886) |
| Impairment loss / (gain) on financial assets |
8 |
(2,508) |
(93) |
(2,478) |
| Share-based payment non-cash charges |
6,204 |
3,322 |
17,441 |
7,072 |
| Other operating (gain)/loss |
578 |
- |
3,950 |
- |
| Other non-recurring costs |
- |
- |
- |
1,229 |
| Tax effect on adjustments |
(4,227) |
1,092 |
411 |
448 |
| Adjusted net income |
43,405 |
49,206 |
109,788 |
134,653 |
| |
|
|
|
|
Unaudited quarterly results.
Earnings per share
We calculate basic earnings per share by
dividing the profit attributable to owners of the group by the
weighted average number of common shares issued and outstanding
during the three-month and nine-month periods ended September 30,
2024 and 2023.
Our diluted earnings per share is calculated by
dividing the profit attributable to owners of the group of dLocal
by the weighted average number of common shares outstanding during
the period plus the weighted average number of common shares that
would be issued on conversion of all dilutive potential common
shares into common shares.
The following table presents the information
used as a basis for the calculation of our earnings per share:
| |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
2023 |
2024 |
2023 |
| Profit attributable to common shareholders (USD) |
26,782,000 |
40,308,000 |
90,734,000 |
120,449,000 |
| Weighted average number of common shares |
282,212,297 |
289,411,641 |
291,582,333 |
292,058,528 |
| Adjustments for calculation of diluted earnings per share |
14,108,758 |
16,620,498 |
15,154,672 |
16,509,161 |
| Weighted average number of common shares for calculating
diluted earnings per share |
296,321,055 |
306,032,139 |
306,737,005 |
308,567,689 |
| Basic earnings per share |
0.09 |
0.14 |
0.31 |
0.41 |
| Diluted earnings per share |
0.09 |
0.13 |
0.30 |
0.39 |
| |
|
|
|
|
This press release does not contain sufficient
information to constitute an interim financial report as defined in
International Accounting Standards 34, “Interim Financial
Reporting” nor a financial statement as defined by International
Accounting Standards 1 “Presentation of Financial Statements”. The
quarterly financial information in this press release has not been
audited, whereas the annual results for the year ended December 31,
2023 are audited.
Conference call and webcast
dLocal’s management team will host a conference
call and audio webcast on November 13, 2024 at 6:00 p.m. Eastern
Time. Please click here to pre-register for the conference call and
obtain your dial in number and passcode.
The live conference call can be accessed via
audio webcast at the investor relations section of dLocal’s
website, at https://investor.dlocal.com/. An archive of the webcast
will be available for a year following the conclusion of the
conference call. The investor presentation will also be filed on
EDGAR at www.sec.gov.
About dLocal
dLocal powers local payments in emerging
markets, connecting global enterprise merchants with billions of
emerging market consumers in more than 40 countries across Africa,
Asia, and Latin America. Through the “One dLocal” platform (one
direct API, one platform, and one contract), global companies can
accept payments, send pay-outs and settle funds globally without
the need to manage separate pay-in and pay-out processors, set up
numerous local entities, and integrate multiple acquirers and
payment methods in each market.
Definition of selected operational
metrics
“API” means application programming interface,
which is a general term for programming techniques that are
available for software developers when they integrate with a
particular service or application. In the payments industry, APIs
are usually provided by any party participating in the money flow
(such as payment gateways, processors, and service providers) to
facilitate the money transfer process.
“Cross-border” means a payment transaction
whereby dLocal is collecting in one currency and settling into a
different currency and/or in a different geography.
“Local payment methods” refers to any payment
method that is processed in the country where the end user of the
merchant sending or receiving payments is located, which include
credit and debit cards, cash payments, bank transfers, mobile
money, and digital wallets.
“Local-to-local” means a payment transaction
whereby dLocal is collecting and settling in the same currency.
“Net Revenue Retention Rate” or “NRR” is a U.S.
dollar-based measure of retention and growth of dLocal’s merchants.
NRR is calculated for a period or year by dividing the Current
Period/Year Revenue by the Prior Period/Year Revenue. The Prior
Period/Year Revenue is the revenue billed by us to all our
customers in the prior period. The Current Period/Year Revenue is
the revenue billed by us in the current period to the same
customers included in the Prior Period/Year Revenue. Current
Period/Year Revenue includes revenues from any upselling and
cross-selling across products, geographies, and payment methods to
such merchant customers, and is net of any contractions or
attrition, in respect of such merchant customers, and excludes
revenue from new customers on-boarded in the preceding twelve
months. As most of dLocal revenues come from existing merchants,
the NRR rate is a key metric used by management, and we believe it
is useful for investors in order to assess our retention of
existing customers and growth in revenues from our existing
customer base.
“Pay-in” means a payment transaction whereby
dLocal’s merchant customers receive payment from their
customers.
“Pay-out” means a payment transaction whereby
dLocal disburses money in local currency to the business partners
or customers of dLocal’s merchant customers.
“Revenue from New Merchants” means the revenue
billed by us to merchant customers that we did not bill revenues in
the same quarter (or period) of the prior year.
“Revenue from Existing Merchants” means the
revenue billed by us in the last twelve months to the merchant
customers that we billed revenue in the same quarter (or period) of
the prior year.
“TPV” dLocal presents total payment volume, or
TPV, which is an operating metric of the aggregate value of all
payments successfully processed through dLocal’s payments platform.
Because revenue depends significantly on the total value of
transactions processed through the dLocal platform, management
believes that TPV is an indicator of the success of dLocal’s global
merchants, the satisfaction of their end users, and the scale and
growth of dLocal’s business.
Rounding: We have made rounding adjustments to
some of the figures included in this interim report. Accordingly,
numerical figures shown as totals in some tables may not be an
arithmetic aggregation of the figures that preceded them.
Forward-looking statements
This press release contains certain
forward-looking statements. These forward-looking statements convey
dLocal’s current expectations or forecasts of future events,
including guidance in respect of total payment volume, gross
profit, Adjusted EBITDA, and Adjusted EBITDA over gross profit
margin. Forward-looking statements regarding dLocal and amounts
stated as guidance are based on current management expectations and
involve known and unknown risks, uncertainties and other factors
that may cause dLocal’s actual results, performance or achievements
to be materially different from any future results, performances or
achievements expressed or implied by the forward-looking
statements. Certain of these risks and uncertainties are described
in the “Risk Factors,” “Forward-Looking Statements” and “Cautionary
Statement Regarding Forward-Looking Statements” sections of
dLocal’s filings with the U.S. Securities and Exchange Commission.
Unless required by law, dLocal undertakes no obligation to publicly
update or revise any forward-looking statements to reflect
circumstances or events after the date hereof. In addition, dLocal
is unable to present a quantitative reconciliation of
forward-looking guidance for Adjusted EBITDA and Adjusted EBITDA
over gross profit, which are forward-looking non-IFRS measures,
because dLocal cannot reliably predict certain of their necessary
components, such as impairment gains/(losses) on financial assets,
transaction costs, and inflation adjustment.
dLocal LimitedCertain financial
informationConsolidated Condensed Interim Statements of
Comprehensive Income for the three-month and nine-month periods
ended September 30, 2024 and 2023(In thousands of U.S. dollars,
except per share amounts)
| |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
2023 |
2024 |
2023 |
| Continuing operations |
|
|
|
|
| Revenues |
185,774 |
163,921 |
541,483 |
462,346 |
| Cost of services |
(107,594) |
(89,378) |
(330,521) |
(255,206) |
| Gross profit |
78,180 |
74,543 |
210,962 |
207,140 |
| |
|
|
|
|
| Technology and development expenses |
(6,930) |
(3,696) |
(18,803) |
(8,626) |
| Sales and marketing expenses |
(6,892) |
(4,447) |
(16,028) |
(12,410) |
| General and administrative expenses |
(22,636) |
(17,378) |
(74,042) |
(49,926) |
| Impairment (loss)/gain on financial assets |
(8) |
2,508 |
93 |
2,478 |
| Other operating
(loss)/gain |
(578) |
- |
(3,950) |
- |
| Operating profit |
41,136 |
51,530 |
98,232 |
138,656 |
| Finance income |
7,335 |
44,449 |
54,839 |
70,315 |
| Finance costs |
(17,420) |
(42,901) |
(36,580) |
(59,917) |
| Inflation adjustment |
(1,954) |
(3,817) |
(6,263) |
(6,497) |
| Other
results |
(12,039) |
(2,269) |
11,996 |
3,901 |
| Profit before income tax |
29,097 |
49,261 |
110,228 |
142,557 |
| Income tax
expense |
(2,286) |
(8,897) |
(19,460) |
(21,952) |
| Profit for the period |
26,811 |
40,364 |
90,768 |
120,605 |
| |
|
|
|
|
| Profit attributable to: |
|
|
|
|
| Owners of the Group |
26,782 |
40,308 |
90,734 |
120,449 |
| Non-controlling interest |
29 |
56 |
34 |
156 |
| Profit for the period |
26,811 |
40,364 |
90,768 |
120,605 |
| |
|
|
|
|
| Earnings per share (in USD) |
|
|
|
|
| Basic Earnings per share |
0.09 |
0.14 |
0.31 |
0.41 |
| Diluted Earnings per share |
0.09 |
0.13 |
0.30 |
0.39 |
| |
|
|
|
|
| Other comprehensive income |
|
|
|
|
| Items that may be reclassified to profit or loss: |
|
|
|
|
| Exchange difference on translation on foreign operations |
(498) |
(1,822) |
(6,771) |
1,341 |
| Other
comprehensive income for the period, net of tax |
(498) |
(1,822) |
(6,771) |
1,341 |
| Total comprehensive income for the period, net of
tax |
26,313 |
38,542 |
83,997 |
121,946 |
| |
|
|
|
|
| Total comprehensive income for the period |
|
|
|
|
| Owners of the Group |
26,301 |
38,487 |
83,979 |
121,792 |
| Non-controlling interest |
12 |
55 |
18 |
154 |
| Total comprehensive income for the period |
26,313 |
38,542 |
83,997 |
121,946 |
| |
|
|
|
|
dLocal LimitedCertain financial
informationConsolidated Condensed Interim Statements of Financial
Position as of September 30, 2024 and December 31, 2023(In
thousands of U.S. dollars)
| |
30 of September, 2024 |
31 of December, 2023 |
| ASSETS |
|
|
| Current Assets |
|
|
| Cash and cash equivalents |
560,532 |
536,160 |
| Financial assets at fair value through profit or loss |
112,247 |
102,677 |
| Trade and other receivables |
405,917 |
363,374 |
| Derivative financial instruments |
591 |
2,040 |
| Other assets |
12,235 |
11,782 |
| Total Current Assets |
1,091,522 |
1,016,033 |
| |
|
|
| Non-Current Assets |
|
|
| Financial assets at fair value through profit or loss |
- |
1,710 |
| Trade and other receivables |
1,787 |
- |
| Deferred tax assets |
3,277 |
2,217 |
| Property, plant and equipment |
3,308 |
2,917 |
| Right-of-use assets |
3,939 |
3,689 |
| Intangible assets |
61,983 |
57,887 |
| Other assets |
5,343 |
- |
| Total
Non-Current Assets |
79,637 |
68,420 |
| TOTAL ASSETS |
1,171,159 |
1,084,453 |
| |
|
|
| LIABILITIES |
|
|
| Current Liabilities |
|
|
| Trade and other payables |
669,608 |
602,493 |
| Lease liabilities |
1,127 |
626 |
| Tax liabilities |
17,525 |
20,800 |
| Derivative financial instruments |
4,579 |
948 |
| Financial liabilities |
16,775 |
- |
| Provisions |
278 |
362 |
| Total Current Liabilities |
709,892 |
625,229 |
| |
|
|
| Non-Current Liabilities |
|
|
| Deferred tax liabilities |
1,276 |
753 |
| Lease liabilities |
2,985 |
3,331 |
| Total
Non-Current Liabilities |
4,261 |
4,084 |
| TOTAL LIABILITIES |
714,153 |
629,313 |
| |
|
|
| EQUITY |
|
|
| Share Capital |
570 |
591 |
| Share Premium |
182,946 |
173,001 |
| Treasury Shares |
(200,980) |
(99,936) |
| Capital Reserve |
30,564 |
21,575 |
| Other Reserves |
(14,749) |
(9,808) |
| Retained earnings |
458,528 |
369,608 |
| Total Equity Attributable to owners of the Group |
456,879 |
455,031 |
| Non-controlling
interest |
127 |
109 |
| TOTAL EQUITY |
457,006 |
455,140 |
| |
|
|
dLocal LimitedCertain interim
financial informationConsolidated Condensed Interim Statements of
Cash flows for the three-month and nine-month periods ended
September 30, 2024 and 2023(In thousands of U.S. dollars)
| |
Three months ended 30 of September |
Nine months ended 30 of September |
| |
2024 |
2023 |
2024 |
2023 |
| Cash flows from operating activities |
|
|
|
|
|
Profit before income tax |
29,097 |
49,261 |
110,228 |
142,557 |
| Adjustments: |
|
|
|
|
|
Interest (Income) from financial instruments |
(7,430) |
(20,217) |
(21,345) |
(42,429) |
|
Interest charges for lease liabilities |
44 |
373 |
131 |
468 |
|
Other finance expense |
1,220 |
1,918 |
3,020 |
3,120 |
|
Finance expense related to derivative financial instruments |
7,765 |
12,647 |
20,089 |
22,516 |
|
Net exchange differences |
12,705 |
28,438 |
18,873 |
32,520 |
|
Fair value gain on financial assets at fair value through profit or
loss |
95 |
(24,232) |
(33,494) |
(27,886) |
|
Amortization of Intangible assets |
4,033 |
2,897 |
11,147 |
7,565 |
|
Depreciation of Property, plant and equipment and Right-of-use
asset |
405 |
219 |
1,142 |
626 |
|
Disposal of Right-of-use asset |
79 |
121 |
90 |
430 |
|
Share-based payment expense, net of forfeitures |
6,204 |
3,322 |
17,441 |
7,072 |
|
Other operating loss |
578 |
- |
3,950 |
- |
|
Net Impairment loss/(gain) on financial assets |
8 |
(2,508) |
(93) |
(2,478) |
|
Inflation adjustment |
515 |
- |
(11,359) |
- |
| |
55,318 |
52,239 |
119,820 |
144,081 |
| Changes in working capital |
|
|
|
|
|
Increase in Trade and other receivables |
48,999 |
(12,706) |
(53,159) |
(72,092) |
|
Decrease in Other assets |
(1,204) |
19,592 |
1,299 |
31,749 |
|
Increase in Trade and other payables |
(49,489) |
(48,174) |
63,743 |
141,965 |
|
Increase/(Decrease) in Tax Liabilities |
(7,099) |
(1,035) |
651 |
(4,376) |
|
Decrease in Provisions |
2 |
(279) |
(84) |
(836) |
| Cash from operating activities |
46,527 |
9,637 |
132,271 |
240,491 |
|
Income tax paid |
(6,956) |
(1,663) |
(23,923) |
(8,479) |
| Net cash from operating activities |
39,571 |
7,974 |
108,347 |
232,012 |
| |
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
|
Acquisitions of Property, plant and equipment |
(52) |
(329) |
(1,278) |
(986) |
|
Additions of Intangible assets |
(5,379) |
(4,358) |
(15,243) |
(12,503) |
|
Acquisition of financial assets at FVPL |
(9,775) |
(53,531) |
(106,616) |
(101,670) |
|
Net collections of financial assets at FVPL |
9,796 |
(3,757) |
108,097 |
(2,234) |
|
Interest collected from financial instruments |
7,430 |
20,454 |
21,345 |
42,429 |
| Net cash used in investing activities |
2,020 |
(41,521) |
6,305 |
(74,964) |
| |
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
|
Repurchase of shares |
(19,316) |
- |
(101,067) |
(97,929) |
|
Share-options exercise |
1,403 |
- |
1,495 |
153 |
|
Interest payments on lease liability |
(44) |
(373) |
(131) |
(468) |
|
Principal payments on lease liability |
(371) |
(512) |
(440) |
(788) |
|
Finance expense paid related to derivative financial
instruments |
(3,970) |
(9,466) |
(15,009) |
(20,803) |
|
Net proceeds from financial liabilities |
16,775 |
- |
16,775 |
- |
|
Interest payments on financial liabilities |
(648) |
- |
(648) |
- |
|
Other finance expense paid |
(724) |
(1,915) |
(1,123) |
(3,120) |
| Net cash used
in financing activities |
(6,895) |
(12,266) |
(100,148) |
(122,955) |
| Net increase in cash flow |
34,696 |
(45,813) |
14,505 |
34,093 |
| |
|
|
|
|
| Cash and cash equivalents at the beginning of the
period |
531,620 |
549,386 |
536,160 |
468,092 |
|
Net (decrease)/increase in cash flow |
34,696 |
(45,813) |
14,505 |
34,093 |
|
Effects of exchange rate changes on cash and cash equivalents |
(5,784) |
(5,408) |
9,868 |
(4,020) |
| Cash and cash equivalents at the end of the
period |
560,532 |
498,165 |
560,532 |
498,165 |
| |
|
|
|
|
Investor Relations Contact:investor@dlocal.com
Media Contact:media@dlocal.com
_______________________________________________1 Source: FXC
Intelligence – Market Sizing dataset.
DLocal (NASDAQ:DLO)
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