DLocal shares plunge 17% as Q1 earnings miss expectations

MONTEVIDEO – Shares of DLocal Limited (NASDAQ:DLO), a prominent technology-first payments platform, plunged 17% following its first-quarter financial report, which fell short of Wall Street expectations.

The company reported adjusted earnings per share (EPS) of $0.06, significantly lower than the analyst consensus of $0.12. Revenue for the quarter was also below expectations at $184.4 million, compared to the anticipated $190.1 million.

DLocal’s Total Payment Volume (TPV) showcased a robust year-over-year (YoY) increase of 49%, reaching a record $5.3 billion. However, this impressive growth did not translate into expected profitability, with the company’s adjusted EBITDA declining by 19% YoY to $37 million. Revenue growth of 34% YoY was overshadowed by a quarter-over-quarter (QoQ) decrease of 2%, and gross profit experienced a modest 2% YoY increase but a 10% QoQ drop.

The company’s financial performance was impacted by several factors, including a major merchant renegotiating fees and achieving a new level in DLocal’s tiered pricing scheme, a shift in product mix towards lower monetizing payout volumes, and delayed merchant launches. Seasonal weakness in core pay-in verticals such as e-commerce and advertising also contributed to the mixed results.

Despite the disappointing quarter, CEO Pedro Arnt remains optimistic about the company’s long-term prospects, emphasizing the strategic nature of their operational investments and expressing confidence in the company’s ability to rebound in gross profit. DLocal ended the quarter with a strong liquidity position of $320 million, which has led to the authorization of a new share repurchase program of up to $200 million.

The company’s performance in key markets like Brazil and Mexico was a highlight, with revenue in these regions growing by 89% and 50% YoY, respectively. However, the overall gross profit margin declined to 34% from 45% in the first quarter of the previous year, reflecting a shift towards higher payout volumes and the aforementioned pricing renegotiation.

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