What They Do
DLocal is a cross-border payments platform that helps global companies accept and send payments in emerging markets across Latin America, Africa, and Asia. They solve the complexity of local payment processing by providing a single API that connects to 900+ local payment methods in 40+ markets, enabling everything from e-commerce transactions to remittances. The company makes money by taking a percentage of each transaction processed through their platform.
Investment Thesis
**Explosive Growth in Massive TAM**: TPV growth of 59% year-over-year with four consecutive quarters above 50% growth, capturing share in a $180B+ emerging markets payments opportunity**Strong Unit Economics**: Net revenue retention of 149% demonstrates powerful land-and-expand model with existing merchants driving organic growth**Geographic Diversification**: Reducing concentration risk as top 3 markets grow slower than emerging regions, creating more predictable revenue streams across 40+ marketsKey Risks
**Trade Policy Headwinds**: Increased tariffs in Mexico already causing business slowdown, with potential for similar trade barriers in other key markets**Currency Volatility**: Exposure to emerging market currencies creates revenue unpredictability, though Argentina peso exposure has been reducedGrowth Story
DLocal is riding the digitization wave in emerging markets, with revenue growing 52% year-over-year to $282M as cross-border volumes surged 75%. The company is expanding beyond core payments into higher-margin services like Buy Now Pay Later (2.5x quarterly volume growth) and building new capabilities around stablecoins and card-present transactions. With consistent 50%+ TPV growth and strong merchant retention, they're capturing increasing wallet share as global companies expand into emerging markets.
Profitability Profile
The company maintains healthy 39.5% gross margins while scaling efficiently, with gross profit reaching a record $103M (up 32% year-over-year). Adjusted EBITDA represents 70% of gross profit at $72M, demonstrating strong operational leverage as the platform scales. Free cash flow generation of $38M shows the business is converting growth into cash while continuing to invest in expansion.
Competitive Position
DLocal operates as a critical infrastructure layer for global companies entering fragmented emerging markets, competing against local processors and global players like Adyen and Stripe. Their key differentiation lies in deep local market expertise and regulatory compliance across 40+ countries, creating high switching costs and barriers to entry. The single API integration model provides significant convenience versus managing multiple local relationships.
Recent Momentum
The most recent quarter delivered exceptional results with TPV exceeding $10B for the first time and revenue beating estimates by 12.6%. The strong performance was broad-based across verticals (remittances, e-commerce, delivery, SaaS) and geographies, though management highlighted emerging tariff headwinds in Mexico. The market responded positively to the diversification story and sustained high growth rates.
What Wall Street Thinks
Analysts are bullish on the secular growth opportunity but remain cautious about execution risks in volatile emerging markets. The consensus projects 30.3% revenue growth in CY26 with EPS reaching $0.86, though there's debate about sustainability of current growth rates. Key focus areas include geographic diversification progress and margin expansion potential as the platform matures.
The Bottom Line
DLocal is the dominant infrastructure play for the massive emerging markets payments opportunity, delivering consistent 50%+ growth while diversifying away from concentration risk—but investors must weigh the compelling growth story against inherent emerging market volatility and trade policy uncertainties.
