DLocal: Uruguay-based payment processor with potential for global expansion

DLocal Limited, a payment processor in Uruguay, is expanding globally like Stripe and Adyen, helping e-commerce players such as TEMU and Amazon. Its asset-light business model provides significant benefits. The company's growth is driven by the expansion of global e-commerce players in emerging markets.

DLocal Limited, a payment processor headquartered in Uruguay, is making significant strides in its global expansion, following the footsteps of industry giants like Stripe and Adyen. The company's asset-light business model provides it with substantial operational leverage, which is expected to drive strong EBITDA growth as fixed costs remain low. DLocal's first-mover advantage in the Latin American market is also a significant factor in its growth trajectory.

The company has been instrumental in facilitating the expansion of global e-commerce players such as TEMU and Amazon in emerging markets. The market opportunity in these regions is immense, driven by low online and banking penetration. According to the company's Q1 results for 2025, Total Payment Volume (TPV) grew by 53% year-over-year (YoY) and 5% quarter-over-quarter (QoQ), reaching $8.1 billion. However, the take rate came below expectations, which weighed on the share price [1].

Despite this, DLocal continues to deliver elevated top-line growth, with revenue reaching $217 million, gross profit at $85 million, and EBITDA at $58 million, representing strong YoY growth of 56% and 70%, respectively. The company's fee-based model makes it immune to inflation, providing a stable revenue stream.

DLocal's take rate has been steadily declining in recent years, from 6% in 2022 to 2.68% in 2025. The key drivers behind this decline include the growth and onboarding of large-volume clients who negotiate lower fees, a shift in transaction mix toward lower-fee local payment methods, and foreign exchange dynamics. To counteract this trend, DLocal has focused on launching new high-margin product lines and expanding into frontier markets where take rates are structurally higher [1].

The company is also pursuing cost efficiencies and pricing renegotiations, reflected in the more stable gross margin performance. Despite increased operating expenses (OPEX) aimed at supporting long-term growth, DLocal continues to drive operational efficiencies, with the adjusted EBITDA to gross profit ratio reaching 68% in Q1 2025.

DLocal's ability to retain clients and grow their transaction volumes over time is demonstrated by its TPV net retention rate, which remains far above 100%. The company's strong tech and product development, including the use of network tokenization and 3D Secure protocols, further differentiate it in the market [1].

Under the leadership of CEO Pedro Arnt, a former Mercado Libre executive, DLocal has reached a significant milestone in its growth journey. Arnt's experience and leadership are reassuring to investors, particularly as the company becomes more complex and scales globally. The presence of institutional investors such as General Atlantic and Unsal Holdings Ltd adds a layer of oversight and reinforces the company's commitment to compliance and corporate governance best practices [1].

In terms of valuation, DLocal's P/E GAAP over 22X may seem less competitive compared to peers like StoneCo (STNE) and PagSeguro (PAGS), but the company's growth opportunities and operating leverage in a 100% digital business make it a compelling investment. According to guidance, DLocal's EPS should be able to grow between 20% and 30% annually, providing a reasonable valuation and attractive total return for investors.

References:
[1] https://seekingalpha.com/article/4800034-dlocal-emerging-markets-stripe-to-play-global-expansion