DLocal Ltd. Q4 FY2024 earnings call

• TPV grew 45% year-over-year to $26 billion in 2024, driven by diverse verticals, countries, and products.
• Gross profit was $295 million, adjusted EBITDA $189 million, with an adjusted EBITDA over gross profit margin of 64%.
• Invested in technology team, adding 194 new talents, totaling 1,095 team members across 49 countries.
• Launched 20 new pay-in methods and 7 payout methods, and 100 new partner integrations.
• Improved customer support response time by 88% and issue resolution by 45% via AI.
• Expanded license portfolio with 9 new licenses, including UK FCA authorization.

In the fourth quarter of 2024, dLocal achieved a record TPV of $26 billion, a 45% year-over-year increase. Gross profit was $295 million, and adjusted EBITDA was $189 million, with an adjusted EBITDA over gross profit margin of 64%. For the quarter, gross profit reached a record $84 million, up 20% year-over-year. LATAM gross profit was $56 million, up 3% year-over-year, while Africa and Asia gross profit posted an 82% year-over-year growth. Revenue in Q4 surpassed $200 million, a 9% year-over-year growth, with constant currency revenue growth around 40% year-over-year.

• 2025 guidance focuses on strong TPV growth driven by scale leadership, revenue growth, and gross profit guidance considering mix shifts, FX assumptions, and new product launches.
• Discontinued midterm guidance, focusing on annual targets while highlighting sustained momentum and operational execution to hit annual targets.

• Volatility in emerging markets due to macroeconomic shifts, regulatory changes, and currency fluctuations.
• Take rate compression from large merchant growth and payment mix shifts, including lower take rates from the ramp-up of standalone payment orchestration.

Q: How do you think about FX when setting guidance and where do you think you are in terms of wallet share with merchants?

A: On FX, it's almost FX neutral basis, assuming steady rates; on wallet share, extremely optimistic on TPV growth due to increased digitalization in emerging markets and low share of merchants' wallets in smaller markets.

Q: Can you provide more color on cash flow changes related to settlement and the gross profit guidance slowdown?

A: Cash flow affected by trade receivables delays and shortened settlement periods from orchestration product; gross profit guidance considers offsets like growth in higher take rate verticals and mix shift to frontier markets despite take rate compression.

Q: Comment on take rate projection and profitability outlook?

A: Take rate compression seen, but offsets from new products and frontier market mix shift; profitability outlook positive with operational leverage potential after investment cycle.

Q: Elaborate on pricing in RFP discussions and orchestration model expansion?

A: Pricing driven by merchant volumes, not repeated repricing pattern; orchestration model makes sense in large markets for merchants seeking direct settlements and reporting.

Q: Pipeline and free cash flow outlook for 2025?

A: Expect pickup in new merchant volume, with TPV retention high; free cash flow guided considering cash generation and capital allocation strategy