DLocal Limited Q3 FY2025 earnings call

Key Points

• Delivered record quarter with TPV >$10B and gross profit >$100M. TPV grew 60% YoY in dollars and 66% constant currency.
• Gross profit reached $103M, up 32% YoY. Adjusted EBITDA was $72M, 70% of gross profit.
• Net income $52M due to lower finance costs. Adjusted free cash flow to net income conversion remains healthy.

Product Innovation

• APMs-on-file cover 27 local payment methods in 16 countries, with conversion rates improving (e.g., Yape tokenization in Peru).
• Launched Buy Now, Pay Later Fuse in 6 countries, with 2.5x volume growth quarter-over-quarter via revenue share model with local partners.

Merchant Diversification

• Top 3 markets growing but slower, reducing impact of individual market volatility. Top merchant concentration rotates as new merchants grow.

dLocal delivered a record third quarter in 2025 with TPV exceeding $10 billion and gross profit surpassing $100 million. TPV grew nearly 60% year-over-year in dollars and 66% on a constant currency basis, marking the fourth consecutive quarter of TPV growth above 50%. Gross profit reached $103 million, up roughly 32% year-over-year and 36% for the first 9 months of 2025. Revenue was $282 million, up 52% year-over-year. The quarter's results were driven by strong volume growth across segments, with particular strength in Brazil, Colombia, LatAm, Africa, and Asia, but was partially offset by macro volatility in Argentina, cost pressure in Mexico, and share of wallet losses in Egypt. The top 3 markets continued to grow healthily but at a slower pace than others, indicating diversification.

Guidance

• Reiterate guidance numbers with TPV expected to exceed the high end of the range shared in second quarter '25 earnings call.
• Revenue tracking around upper limit for the year; gross profit and adjusted EBITDA between midpoint and upper level.

Risks Mentioned

• Tariffs in Mexico causing slowdown in TPV growth.
• Shifting fiscal/tax regimes in Brazil.
• Potential currency devaluations or FX regime changes in markets like Egypt or Bolivia.

• Tariffs in Mexico have already led to a slowdown in TPV growth.
• Brazil's shifting fiscal landscape poses potential headwinds, though no immediate negative impact on dLocal identified yet.
• Currency devaluations or changes in FX regimes in other markets (e.g., Egypt, Bolivia) could affect financial results.

Q: Question about Argentina's FX situation and its impact on dLocal, and Brazil's tax regime impact on the business.

A: Pedro Arnt stated Argentina has seen TPV pickup post-elections, but FX monitoring is key; Brazil's specific tax mentioned doesn't affect dLocal, and no immediate negative impact from Brazilian fiscal shifts.

Q: Question about volume growth verticals (remittances, e-commerce) and future outlook.

A: Pedro Arnt noted strong growth across diversified verticals like remittances, e-commerce, streaming, etc., with no signs of alarm for these verticals in 2026.

Q: Question about take rate and BNPL impact on take rate.

A: Pedro Arnt explained take rate has a one-off headwind, and BNPL Fuse has potential for higher take rate via revenue share model.

Q: Question about Brazil growth composition and gross profit margin.

A: Pedro Arnt said Brazil's growth is broad-based across long-term global relationships and new adds, with higher cross-border mix and better spreads contributing to margin rebound.

Q: Question about APMs impact on take rate and dLocal's differentiation.

A: Pedro Arnt noted APMs have lower net take rate but significant volume potential, acting as a differentiator for gaining wallet share.

Q: Question about embedded finance products to offset take rate pressure.

A: Pedro Arnt mentioned embedded finance efforts like BNPL, card-present capabilities, stablecoin on/off-ramps, and KYC as a service, with focus on building product to address merchant needs.