DLO slides 15% as earnings, outlook fail to impress

DLO slides 15% as earnings, outlook fail to impress

dLocal, a leading global fintech company, reported its Q4 (Dec) earnings. The company outpaced top line expectations but profitability fell short of consensus, sending shares tumbling through a convergence of key support levels at the $16.75-17 area. The stock is attempting to stabilize at the $15 area. 

Dlo reported earnings of $0.10 per share, consensus of $0.15. The company's revenues rose 58.8% year/year to $188.01 million, surpassing the consensus of $173.13 million. In Q4, TPV reached a record high of $5.1 billion, increasing by 55% year-over-year and 11% quarter-over-quarter.

The company's net revenue retention rate stood at 149%. Gross profit increased by 27% year-over-year to $70 million but decreased by 6% quarter-over-quarter. Adjusted EBITDA was up 22% year-over-year to $49 million but down 11% quarter-over-quarter.

In 2023, the company achieved a record TPV of $18 billion, representing a 67% YoY growth, and exceeded its revenue guidance, reaching $650 million, up 55% YoY. This growth has been fueled by existing merchants, as the company continues to gain wallet share. The strong performance was seen across various verticals and geographies, with revenues increasing 89% and 72% YoY in Brazil and Mexico, respectively.

For 2024, the company expects TPV (Total Payment Volume) growth of 40% to 50%, surpassing $26B of TPV at the midpoint. Gross profit is expected to be between $320 and $360 million, and Adjusted EBITDA is expected to be between $220 and $260 million.

The outlook assumes an increased mix from Tier 0 merchants, continued growth in local to local business, and a shift in growth to less mature markets where the company's operations have not yet reached scale. Gross profit is expected to grow at a rate of 25%-35% CAGR, and Adjusted EBITDA is expected to account for 70% of gross profit.

In conclusion, dLocal's Q4 earnings report shows strong growth across various metrics, reflecting the company's success in gaining wallet share and expanding into new markets. The company remains committed to driving gross profit dollars growth and maintaining its industry-leading profitability ratios. With a focus on investing in technology, operations, and sales, dLocal is positioning itself for long-term growth and sustainability.