DLocal’s Q1 Surge: A Beacon of Growth in the Cross-Border Payment Revolution

The global shift to digital commerce is creating a seismic opportunity for companies that can bridge fragmented payment ecosystems. DLocal (DLO), a leader in cross-border payments and commerce enablement, has delivered a Q1 2025 performance that underscores its position as a prime beneficiary of this structural shift. With revenue diversification, margin expansion, and rapid merchant growth, DLocal is not just thriving—it’s rewriting the rules of global trade.

Revenue Diversification: A Global Play with Emerging Markets at Its Core

DLocal’s Q1 results reveal a company leveraging its geographic and vertical diversification to build a moat against volatility. 65% of revenue originated outside the U.S., with emerging markets like Southeast Asia (22%), Latin America (18%), and Africa (14%) driving growth. This is no accident: DLocal is systematically targeting regions where digital payment adoption is exploding.

The company’s cross-border transaction volume (TPV) surged 53% year-over-year to $8.1 billion, with higher-margin cross-border services now accounting for 47% of TPV. Even more compelling is the 27% YoY growth in wallet-based revenue, outpacing card transactions by double the rate. This shift aligns perfectly with the global preference for digital wallets (e.g., GrabPay, Mercado Pago) in markets like Indonesia and Brazil.

Sector-wise, DLocal’s balance sheet is bulletproof: e-commerce (40%), fintech (30%), and travel (30%) revenue streams provide a risk-resistant portfolio. No single client exceeds 5% of revenue, and the top 10 clients contribute only 32%. This diversification isn’t just about safety—it’s a growth engine.

Margin Expansion: Proof of Operational Mastery

DLocal isn’t just growing—it’s doing so profitably. Gross margins hit 39% in Q1 2025, up from 34% a year earlier, driven by automation, cost discipline, and a strategic pivot toward high-margin verticals like remittances and fintech. Even better, Adjusted EBITDA margins expanded to 27%, a 7-point jump from 2024.

The company’s “One dLocal” platform—a unified API and settlement system—has been a game-changer. By simplifying cross-border processes, it reduced customer support response times by 88% in 2024, cutting costs while boosting merchant retention. While Brazil’s transition to a new payment model and Africa’s cost challenges created headwinds, regions like Argentina and Chile more than offset them.

Merchant Acquisition: The Tipping Point for Scale

DLocal’s merchant base is now a force multiplier. The company aims to add 10,000 new merchants annually by 2025, doubling its 2024 pace. This is no small feat: 70% of its growth now comes from SMEs and enterprises in emerging markets, where digital-first businesses are booming.

The secret? Partnerships and product depth. DLocal’s alliances with regional e-commerce platforms and fintech startups streamline onboarding, while its multi-currency accounts (up 19% in active users) and localized payment methods make it indispensable. For example, its integration with GrabPay in Southeast Asia or Mercado Pago in Latin America lets merchants reach millions without technical headaches.

Why This Matters: The Structural Tailwind of Global Trade

The cross-border e-commerce market is on track to hit $5.6 trillion by 2026, fueled by rising internet penetration, digital wallet adoption, and SMEs going global. DLocal’s API-driven infrastructure is the perfect fit for this world: it handles 140% TPV retention for merchants by eliminating currency, compliance, and logistics friction.

In a fragmented landscape with 180+ currencies and 300+ payment methods, DLocal’s 9 new global licenses in 2024 (including UK FCA authorization) and 20 new payment methods added in 2024 give it a regulatory and operational edge. This isn’t just a moat—it’s a fortress.

Risks? Yes. But They’re Manageable.

Currency volatility in emerging markets and regional execution risks (e.g., Brazil’s payment transition) are real. Yet DLocal’s geographic spread and cross-border focus mitigate these: when the Philippine peso weakens, gains in Brazilian real or Indonesian rupiah volumes compensate.

Conclusion: A Buy Signal for Global Payment Infrastructure Bulls

DLocal’s Q1 results are a masterclass in scaling a global infrastructure business. Its diversification, margin discipline, and merchant momentum position it to dominate a $5.6 trillion opportunity. With a 200% YoY surge in free cash flow and a stock price that’s still undervalued relative to its growth trajectory, now is the time to act.

Investors underweight in cross-border payments should take note: DLocal isn’t just a stock—it’s a stake in the future of global trade. The next leg of its growth is just beginning.