Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the DLocal First Quarter 2023 Results Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this call maybe recorded.

I would like to turn the call over to Soledad Nager, Head of Investor Relations.

You may begin.

Soledad Nager

Operator. much, very you Thank Good morning, quarter joining first you and earnings call thank XXXX for today. our everyone,

If you Investor have is not seen our earnings the section posted release, Financial of website. our Relation in a copy

Officer; Chief today, Corporate call Development President COO; Sebastian Chief President joined On and Jaco Canay, Maria the our our I'm Singer, Cabrera of Relations. Officer; Kanovich, and by our Investor Executive Financial Diego Vice and Oldham,

live slide a accessed event presentation to webcast, prepared webcast our the This broadcast at through investor.dlocal.com. be providing accompany is The be remarks. and being event the recording are after is via website may both and will We presentation shortly concluded. available DLocal's

conference me Before events. currently included any on the current call available mention information statements and this expectations, forward-looking future are that about proceeding, and projections DLocal's based presentation let in assumptions, in or mentioned

undue information, statements. currently While cautioned not that reasonable the company believes place given on assumptions, expectations, are you are projections reliance and those available our to forward-looking

Actual reasons, with results conference Commission, variety of Risk filings from a section DLocal's and in Securities on in for call in included of or Factors those discussed which website. those forward-looking presentation are statements this described DLocal's the Investor and may Exchange available DLocal's the including differ materially Relations

I turn to Now, the Seba. over Thank conference will you.

Sebastian Kanovich

had that Good strong morning, everyone. Thanks start for today. I'm a very we the joining to share the pleased call to year.

reaching X% billion. and TPV quarter-over-quarter, $X.X grew year-over-year XX% Our

Our quarter-over-quarter revenue $XXX grew year-over-year XX% and XX% to million.

our dollars. focus We EBITDA growing on absolute gross continue and profit to

by EBITDA and by Both and and million. quarter-over-quarter. year-over-year figures reach XX% first million in of to $XX $X Gross XX% XXXX. XX% grew the adjusted quarter-over-quarter and and profit reach million, gross to EBITDA double-digit year-over-year million year-over-year $XX added XX% quarter-over-quarter We've profit grew $X increased quarter

focused huge been growth, while always profitable ahead on capitalizing the of opportunity to on achieve long-term our delivering ambition, have us. investing We

is to EBITDA focused quarters, our last proud is adjusted ratio consistently on above XX%. We part remained our that This our during remain at of gross D&A. to share investment profit scale. the of are because approach nine growth has We profitable disciplined firmly

young are We company mode. a in growth still

there Over clear deliver long-term, are operating opportunities leverage. the to

and Now performance QX our operations XXXX. discuss Maria in will

Maria Oldham

you, Hi, Thank everyone. Seba.

we merchants. grew QX year a XXXX, QX our business top million top million our in $XX During revenue merchants our from significantly reached XXXX, In XX our XX versus ago. $XX

top newly X our actually concentration among which increased because QX delivered in top top merchant Our in entering XXXX merchants we very rapid XX list. the XX XX growth

for our We work merchants. closely extremely

on at is This in in merchants them our our QX local one X our average margins a [indiscernible] our the to products XX cross-selling to And testament versus strategy processed least XX ago. and During successful payments XXXX, in and solution. Africa country of top countries year in trust a leveraged all Asia.

We are XX and choice, on also of out and they when to top process they both both our in their local-to-local country of cross-border. a decide XX partner of when a us basis. go cross-border operate with X merchants local

next slide. Moving to the

presence in our and countries continuing to and and already establishing acquirers mostly Africa solution. connections During deepening operate, the direct in efforts methods the By enhance payment which our focus more we with in quarter, our on we Asia.

how last about excited opportunity call, Nigeria. our in growth earnings highlighted In Jaco, we are the

opened them more because help to bit merchants needed one Let in in XXXX, in our country our local little payment of of We a share me journey back methods. this this accept country. us

top to to base. X is the merchant our our entire priority. in by needs, As within our We our markets, made roadmap by great solution merchants. today, able offer used out Nigeria were in part and we was emerging our Nigeria merchant is the launch of request And driven this of then XX

solution our the choosing methods. great is One access of to wide payment nontraditional of the benefit

in card. credit According only of to a Statista, X% have population the Nigeria,

alternative rely and it merchants Verve. young The from such card the perspective population. local is our they massive Also, that and opportunity complex as huge solution from on in of country schemes, connect payment our as a there. methods in us merchants, is a and to the to strongly market benefit has So operate Nigeria is

As average. we higher mentioned rate is than in previous quarter, significantly gross take

believe payment is the margin in markets with While methods operates. is the our the profit average, profit lower into but expand. largely other the net markets, FX efficiency take to than more gaining will go deeper medium long-term, and Gross region, the accessing in more integrations as local we rate and line that which over the we in developing gross

we we in growth. the emphasize, profit short-term, business create lower Even on in always long-term. margin dollar the dollar absolute profit most if focus the maximizing valuable As will absolute

on to the geographies. pass I'll to Now, our achievements Jaco, in discuss different

Jacobo Singer

Asia a engine Thank been for you, Maria. key have and Africa of growth us.

geographies, these million grew large have continue markets for Asia year-over-year, XX% of push sign merchants of also with by these XXX% strong and Our results for acceleration reaching by The economics. Revenue and our the into regions part demand speak quarter-over-quarter, to XXXX attractive QX themselves. solution our Africa these a in in Nigeria. a driven $XX

and ago. of with our versus already QX for a quarter-over-quarter. XX% QX strong saw XXx In revenues of we in our Nigeria increasing QX growth Africa year-over-year and accounted year by Nigeria at our relevant Asia XX% revenue portion represent revenues a X% XXXX, business of XXXX. in XX%

becoming regions. And to also early us days have of achieved in as the about more what triple in be for we these Malaysia, progress We significant of and a such to we business. Morocco, Indonesia we believe other several relevant still year-over-year growing our is Egypt, excited are very ahead. proud opportunity markets, them all It are very digit and

region increasing and continue ago. to quarter-over-quarter, than by to on with year-over-year in to growth, revenue solid Moving the a albeit growing million. marked still QX quarter-over-quarter lower year see Latin XXXX slightly XXXX return XX% Argentina's growth XX% levels to positive revenue QX America, across X% by $XX we at

excluding [indiscernible] the in Argentina, a XX% showed see past revenue outperformed growth strong quarter, basis, of Mexico was example quarter-to-quarter revenue might stable for year-over-year you other quarter-over-quarter. markets. and Latam, On growth

showed a We to in by the main XXXX growth our greater In XX% assess strategy. XX% view XX the result significant aggregate. individually highlight the region. order development of to It to than is revenue each view last a of of year-over-year, XX-month the to a countries distribution QX see important a merchant normalized is months growth a revenue on that market look the

merchants are for Our geography. commercial and targets teams by we not internally for organized optimize do

the in which our in offer markets markets we we agreements to with and all supporting in them them operate, have global We merchants, of they the wish access which to emerging grow.

the long-term to team. markets our take areas and our We in invest in drive talent, thoughtfully operations to of pursue the to global new sales the and on towards can hire opportunities marketing, see and continue objectives. product particularly expanding we in We

Tech-related our grew roles XX% XXX team around XXX FTEs now or products. by account by to FTEs, for QX year-over-year rapid XXXX, XX% our supporting we of new innovation our In of employees.

recruit as idiosyncrasies. the leverage to talent on of to understanding and focus local hiring deep knowledge on locally market we continue We ground the of develop Americas outside

workforce. the end will FTEs and Asia our QX of XX% XXX of reach We Africa by representing XXXX, in

has tangling talent in that invest a will cultural ensuring continue always fit. way a talent to strong we disciplined We in that and onboard

it believe of team proud is and ever. our strong as are as We

our Diego financial will highlights. now review

Diego Cabrera Canay

Hi, Jaco. you, Thank everyone.

steady quarter-after-quarter. pay-ins a seen have and We in increase pay-outs TPV

XX% QX for year-over-year, relatively X% XXX% of with Pay-outs by accounting and by the quarter-over-quarter pay-ins our The by product quarter-over-quarter. pay-ins remains increased and During XX% for XXXX, XX% unchanged increased TPV pay-outs and XX%. quarter-over-quarter. year-over-year remaining share

as increased as mile global the position been emerging in to delivery in we for choice payment has payment in companies. The the providing year-over-year continue contribution payroll public successful we service emerging provider ourselves pay-out on-demand and global markets from and have [indiscernible] companies, service markets to payment of last

bring of products We the as their vary. quarter, bring of them, for pay-outs are product of we our and us. strengths which both business. We when involve versus on combine see and one synergies in customers they agnostic. we may incremental share diversification the strategy product and profit, the All our pay-ins merchants for Depending our

forward, Going are positive products. very our the we continued of growth about

With solid XX% XX%, QX from and by local-to-local and in volume quarter-over-quarter quarter-over-quarter. growing volume cross-border its in XX% to contribution Our QX showed share XXXX. cross-border increasing growth year-over-year

As call, Maria seen between that and expect we to earlier merchants strategy combined we a the have from in fluctuation have mentioned quarter-to-quarter. large continue tend services to

growing Revenues XXXX, also reached in a XX% record high of XX% year-over-year $XXX quarter-over-quarter. million QX and

growth We and continue from new delivering from customers. revenue strong our both existing

year-over-year XX% $X growth, points new $XX from existing XXXX, revenue or came During points or and XX million merchants. percentage from percentage merchants XX million QX came

business the XXXX. are mix, to Fluctuations higher-than-average quarter-over-quarter rate or X.X% was mainly of gross main during from Our Nigeria changes the driven rate gross in TPV growth. in were revenues Argentina over X.X% and take drivers quarter-to-quarter take take from QX with the quarter as compared revenue and gross

We continue them products, less of to in new low growth by markets emerging and net is than very The strong churn, X% of our ability to revenue driven share our XXX% continue for year-over-year. of the payment deliver merchants wallet. quarter. a increased retention organic to bringing This methods countries, and

profit we XX, remain absolute growing on to on dollars. Moving gross focused Slide

and During QX, stable up our net $XX gross XX% take reached with quarter-over-quarter, XX% year-over-year X.X%. quarter-over-quarter profit million, at a rate

rate XXXX, in and in to [ph] see X% line increase QX increase increase the is higher we an gross higher TPV exportation with XXXX in costs. Nigeria X.X%. to take processing with from are increases X.X% in from to These mainly quarter, the cost in During X.X% QX in in which attributable fees

XXXX cost of in gross shows and favorably QX changes dropped we gross a in and QX higher have waterfall profit main perspective, margin. optimization service to Product, profit the XX% to a margins on pay-outs XX% margin our XXXX. and contributed the the mix quarter-over-quarter. as to XX% From share in The compared cross-border margin right chart

other with margin. In take Nigeria, as reduced experienced profit positive in largely than with the profit we lower rate a growth strong mix brings gross average margin dollars which the markets contrast, but gross line net country in

margin increasing above in also would excluding quarters, reaching the XXXX, Excluding XX% Nigeria. from in XX% XXXX, XX% been in have QX previous Nigeria, gross profit QX

remain EBITDA. on focused also our growing We

quarter, the year-over-year XX% The margin were in and to to XX% grow we $XX QX. able quarter-over-quarter decrease. million, XX% is up EBITDA adjusted During by was driven and margin decrease Adjusted gross quarter-over-quarter. our the EBITDA year-over-year

was as by decrease lower main with increased Particularly, XXXX, $X it the we that XX% average expenses income totaled of high in the quarter, driver the year-over-year. by nonrecurring Nigeria million. Net XX% million in than of QX XXXX, in gross $XX in growth margin. Sequentially, QX growing incurred

to our even of of buyback. cash advanced touch we for acquired profits that generation flow million part back drivers the main of cash as on sequential or of normalization Seba call own as considering $XX liquidity. for main generation remarks, strong million, [indiscernible] the QX observed In were of a cash XXXX, shares and the closing of handing we I our the Before program. partners the net $XXX will $XX and was funds million buyback The two and use warranties merchants our

with in the measures During bring our to last have taken form of funds our comfort advancements call, funds. earnings we and of additional short-term using shared to you partners we our and extraordinary merchants own that warranties

normalize the the We quarters. to situation also mentioned that we expected next over

million. $XX $X QX, cash decreasing we amount warranty we million advances the of letters merchants, from $XX out credit, or standby $XX restricted of in other assets have as In to held we $XX collected some million gave to the of recovered we already million our million of the and of

Finally, the we receivables We grew strong QX, payables. that generating cases, and our of observed an $XXX variation periods with of competitive reduced sequential of cash cash continue we merchant trade We were the in TPV. remains cash funds. a million generating merchants of from $XXX of normalization and a inflow we a in our Altogether, few March $XX million own million the of with settlement as million a funds position XXXX, net $XXX advantage. of consolidated X, ended position and believe our

the is Seba, yours. floor

Sebastian Kanovich

Diego. Thanks,

continue our proud strong runway and with XXXX very to to excited us. the of of are ahead be start We

business, which growth in record on expansion, executing dollar strategy focus a all our income ahead and profitable us. Our our and continue outstanding This robust on a by profit, and opportunity on gross to build distinctive EBITDA of TPV is combining growth, merchant-centric huge the geographic underpinned our a track strategic revenue, net performance adjusted we shows cross-sell of a tech strength D&A proven basis, merchant long-term our approach. capitalizing standpoint, from

disciplined Last most culture. excellence. and and with lean team continuously importantly, a We all deliver our striving lean this for

million rest We of remain million. and best Our between the culture to million to between and range for $XXX EBITDA merchants our is and implied year. our NRR XXX% most for and on in We XXX% the $XXX outlook Revenue solution delivering adjusted long-term providing our $XXX million key humble of comprehensive an emerging focused continue and the ambitions. the reaffirm $XXX markets. in with

to share business June on and trajectory Day thrilled Investor am more I our ever our in about X. first our

We again company. investors story. changed will on next public chapter and a A you be update you celebrating lot thank Big X are the IPO, continued of years and support. and since our team, global as the see excited customers an our to we share to our their our for has

I operator for questions. the to to will hand now up back open

Operator

from with Morgan Instructions] comes Kuri [Operator Our Stanley. first Jorge question

open. is line Your

Jorge Kuri

you Can Hello. hear me?

Sebastian Kanovich

hear We Jorge. Hi, you.

Jorge Kuri

Hi.

in questions has you operate evidently in as can And numbers grown part maybe disclosure. local-to-local. the exactly be Sorry. and you on Thank and appreciated. that there's business. for for do restrictions. percentage and the perspective? about your market wanted Nigeria through with has walk it if FX of Is Is there lot how limitations repatriate there the and capital geography. to that grow there us very cross-border, everyone needs an I biggest to the I currency? is a to you're accessing, deal it will a how the in congrats that to the beneficial that high be the additional you does market the think business see market? versus cross-border understand And restrictions of any business you all double-click how Can Much what of you. that them a you Can out that Thanks from operate FX access market official on controls is you of you part your

first And uptick is the a nice in then in Argentina. revenues my second was in question Argentina really on There quarter.

of step-ups several going because I or this this similar Thank expect of was see difficulties is little as continue and you wanted like just the we pressure bit that under be if to to one-off see business So sort the normalizes, to are to you. there. the a first operation that a of

Sebastian Kanovich

the the very, much. you I'm Jorge, you thank much very in under flu. I advance. very questions. apologize Thank for

are part proposition. value So in of of positive I apologize our very, we extremely my XXXX. the for it's That's the beauty in beauty excited in the about voice. company very of Nigeria, think We news. so Nigeria and of Nigeria. started results our part We

proud success. It's taken So over get us it. this point, overnight years and is to not this X an to of we are extremely

market in apologize. is there's capital a rate, there's which There's very and of -- as cards. called are to there's there's today, Verve, both official What Just very, sorry, rate. out top a in said card limited international And local-to-local. XX I dynamic us very you credit sense, a an give and you market very prevalent. -- straight market happens is has controls. a There's merchants rate where using credit very X Nigeria there's a Nigeria that few our cross-border Nigeria

market today see so. rate, do why you accessing our we are licensed the margins. are And to We that's

be net take gross margins lower our margins they will in than be average. sorry, -- gross than lower Our rate our are that

as part Our very please. of expectations This rate make words, potentially markets. the both normalize create much Jaco with gain line our pay-outs, is net merchants, take lower. as It's our local-to-local, complement we forward in margins in pay-ins, for to is FX In have the accretive. are Nigeria. margin but value we access free money increase. other we the in We other we we market to going to expect cross-border, scale

Jacobo Singer

the important also able of you for and the time mention to needs of you operate as much and is merchants full with mention to our market It's asked be example Nigeria, go managed within the and thank scale and global they market. payments, a we [ph], are for to to also of want important MPI XXX% us. Verve, local we operate the merchants, which grow It's as the thank you to fulfill scale are, And all market. for go Nigeria scale grow to in a They under very for to integrated So, today, of super because It's to as are offer serve we to and product. in all your that question. suite and managed of local. and mass in Jorge, successful to the in at our

Sebastian Kanovich

basis look on at our and country-by-country Jorge your -- sorry, to not is across on way quarter-by-quarter not The a basis, by Argentina. regions. on but best business question

a is question your fair. So in Argentina. quarter great your We've had point --

crisis back QX this during fundamentally seeing a after impacted coming market trends to are We us QX. that and good

some a volatility. it has that we were complex normalization you its market, is the So Argentina of mentioning. saw Obviously, and

think the in But also ourselves. on the how to applies Nigeria. are This merchants reliant is I key point Argentina

We environment. for complex very are solving a

We are Netflix, for Spotify. solving merchants, countries Nigeria like Argentina or including Facebook,

ground are be very on with to to the change that navigate XXXX countries these environment. expect don't in expect So operating every able merchants continue relevant since and Argentina successfully and to the we We them country. future. for to macroeconomic near And for the in across

Jorge Kuri

Thanks, Seba congrats and Jaco, and again.

Operator

you. Thank

Our Labarta with next Sachs. from Goldman comes question Tito

open. is line Your

Tito Labarta

the A everyone Hi. you Good taking on a my and follow-up questions. couple morning, One, of I Argentina. Seba, for Jaco, first, guess, thank questions. call,

issues just Just how in a is if could currency to some about think Argentina your related risk if devaluation. be all, potential at last few currency, help to know which impact business, potential a that had you've there of lot But concerns in I a devaluation of correcting. about that. seems us quarters, the the

flattish. flattish. if Latin in revenues America of And X in question, I Latin Brazil, last quarters, in has the mean, And but somewhat in you America, understand color any country, guess, second at know don't look look I be around outlook I then been you on And have slowed. give the growth you going the Thank the Brazil, why been my specific kind on, have more anything one helpful. but just can at particular, if say you. of revenues in there's particularly to kind Brazil, would there Any

Sebastian Kanovich

for Tito, very thank question. the much you

in terms of of it. been in devaluation, there's business suffered we in dollars. in have So that operating our years, for we've merchants that hasn't And think Argentina and Keep products constant from devaluation. been their these global all mind

just stock or there's when typically, at Devaluation all which to they currency. we So expatiate our at ability It's reprice. buy a affect different devaluation, doesn't funds. price repatriate our a

expect we on have the of don't currency. exposure any devaluation We Argentina. impact So don't exact to

Our accounts. are in revenues dollars, USD in

the of way devaluation So us affected it in peso affect that The same wouldn't us. the hasn't past.

terms In sense Brazil, these growth, it's XX%. meant a of Mexico, months reason is The XX why Brazil. those grown be was last been fair. I the is because chose metrics is to We've XX%, Latam give XX%. mature your question you markets. The in to most just are

QX market our in in already it's it's QX. in trends seasonal positive in that more a retail. exposure Brazil, bit Brazil. end QX very little than in has more seeing are on slightly We obviously, a Retail,

to from including So and Mexico. Brazil we multiple QX expect in markets, different growth come

we more [indiscernible] of if step. normalization you expect in a So will, don't function. sense. typically in grow We that We

to see I've growth So seen It's an easier thing it linear annually. why do. don't you typically that's and

Tito Labarta

Okay. Seba. That’s helpful. Thanks,

Operator

Thank you.

Morgan. comes from question Falavina with next Our Dom J.P.

Your line open. is

Domingos Falavina

Thanks for everyone. morning, question. taking the Good

So a questions here. couple of

XXX. the about today The Argentina, market the or are when provide FX services second first ask one. Seba, provide just your then And I'll to in official one, to able XXX to you FX clients about you understand, the

Sebastian Kanovich

Dom, the Thanks question. another merchants the call rate. Both about hi, access What which is QX there's rate. a for there's what set official FX of And market you has operated [Indiscernible], access this merchants country models. where our called you? what's that merchants set the access that of business how both of seen in that the We've do rate. and calls limited. we've in QX that been spoke is independently with We are the

that here stay. The reality are is to they

consolidated country. in this Our merchants very are

of the the mind, that taxes also is a in point. price apply. an rate, set currency a number you that's Keep of have official the FX have or just On when given -- you

So we models. both in operate

a of We hedge the and also have opposite flow. payouts, which are

are feel Jaco, So to free both important. dynamics compliment.

Domingos Falavina

[indiscernible]? make just to me yourself? for the and ask -- Let just to how official, expatriate sure you about Are the able

Sebastian Kanovich

are Jaco? Jaco, think you I muted.

Jacobo Singer

Sorry.

me clear point. Dom, about So, be let one

are revenues dollar deducted Our including dollars settlements, in in dollar all revenues Argentina. also [Indiscernible] collect the and in denominated. are and are profits denominated of Argentine. prior revenues our We to markets, which

Domingos Falavina

Yes. But where the get part me to let to be understand. I -- want

understand by recognizing million in converted You're have they accounting approximately revenues $XX to in Argentina. I if Those, FX. be rules,

other they were don't We there companies' that out that have the money. other don't the take expatriate really But they case, or recovery same.

case, reality, your million $XX like if market be in earning not $XX So like million would earning they were in exchange in market it in to you're actually that Argentina. rate, you're rate,

doing get trying different I'm can or XXX. here that official an how we flowing the I rate, that you income in an same to is also at are point part but like or the converted accounting either Nigeria at And the when you statement. rate statement convert, get both, and has understand exactly that So you is money were because looking

Jacobo Singer

and following Dom, you, up. for Thank you thank

very the we reinforce official of this the as be expatriate prior all amount and rate. will the important. expatriated the [indiscernible] have selling to To funds, dollar at get everything we clear, We We that our are in adopt fees, and means in the that amount. already the operating we dollar What revenues or our U.S. fees merchants, we the at dollars EU the entities in in deduct funds it's time

Sebastian Kanovich

Dom, what …

Domingos Falavina

like that there is where no money -- anything accounting So Argentine or parked an there okay. in is

Sebastian Kanovich

want to I Dom, add …

Domingos Falavina

[indiscernible] in Nigeria. nothing And

Sebastian Kanovich

don't are Yes, It's our in We Union accounts accounts. in markets. global our in profits dollars, it's in local not European dollar neutral, local currency and FX hold in markets. profits U.S.

Domingos Falavina

[indiscernible]. on congrats Thank clear. much the you and very Super guys

Operator

you. Thank

from Our America. Bank with Kupferberg next of question Jason comes

open. is line Your

Jason Kupferberg

call is gone just of XX%. the morning. been total Argentina Nigeria, pretty say. guys. I to there out what's just that growth have most on significant you've wanted to on that XXXX, really drivers just it handful payment of know deeper should the methods. alternative I gross months, mix? a you X% country bit Is of since Thank mix? come in Is cross-border, revenue for some you've merchants what margin you, Is from large Can pay-in, can just Thanks. Is operations little XX of I there? costs And you back then it lower? a pay-out remarkable the sorry, the it why processing been? Good scaled -- are local-to-local the it go in of but last have some into

Sebastian Kanovich

you Jason, the for thank very much question.

a are not has you from is not of we competitive global I we extremely, differentiate on So been what service in to not of Also extremely that happened Nigeria, something Today, the that many has and that merchants It's XX the gotten better are public particularly that. us able overnight. there alternatives we've the reality that your proud offer, incrementally. operate when of ground dynamic, dealing easy our X not our on That's Nigeria going is to product with with new to see get that. region. And companies. in trust the a out happens to customers think Top

understanding, And in our clear merchants much product is again, over that that other by deeper gets Nigeria And a time. much opportunity. deeper understanding a better we is there's a a have massive global line And the thing this product country.

a it's an together, all extremely notice. It's the where ingredients on when for country looking expectation one to at from complex add same population time, are it's You those the standpoint a perfect most mix there's of biggest the countries world. you one growth. the And at for us. of And countries the

Indonesia, is that that. that insist the same believe great I in those it's not of But I see think extremely growth, time, allow time. been in compound continue things business why Nigeria and many and Egypt, very this dynamics takes to know in to But you of some I'd only Nigeria. we in on our are and that's and positive We opportunity. proud us say differentiate. we of over investing Morocco, in Malaysia, on has

when also synergy, Nigeria a We bullish of because not are are because the opportunity Nigeria, only We in but more because a merchants become extremely, use extremely better about entrenched. we company.

and more there. differentiate other we every player out much We have significant advantage, competitive from

of to In complement. terms Maria, free margin, feel

higher We than take a much have average rate. gross

there's line care when XX covering much net our expatriation. countries. point we of out and function We a But insist we payments processing that's I of rate, very of in many levers. cost what's levers, so take driving have that's and it. and Nigeria And and know on I this that's the of much why about very these calls attention, are proud it. everyone's a

were to going where one This be country There's have Indonesia. was to a Brazil. going You're [indiscernible] to grow going other to healthy we that's be thing. going case faster. quarters Nigeria. to is Other perfectly going be And think

Maria Oldham

Thank Jason. you,

important opportunities [indiscernible] gaining improve volume gross processing on expansion our in and of that we is scale, costs connections to the our complementing we Nigeria very our expand Just and gross profit one then markets. margin, more notice have And as to building go margin. deeper the market,

Jason Kupferberg

right. Right,

makes sense. That Okay.

I of I to the own buybacks a in $XX cash Just balance. as follow-up, wanted million you know about had quarter. your ask the

see own a cash. quarter-over-quarter did So in we decline your

looking Just How we at cash own that the think be up in think directionally go as your will for about you or Do should second quarter-over-quarter quarter? QX? figure? we down

Sebastian Kanovich

want take to you do it? Diego,

Diego Cabrera Canay

to Sure. Thanks the first we for cash the strong question. And say, had generation during thing very quarter. a

the cash advancements from continue compares expect the portion in growth release cash have quarter the this $XX million inflow investing that. to after from $XX by the share warranties the -- And and of without and inflow we income this and share an $XX TPV. the provided $XX increase a million we comes been going the $XX of of million in buyback partners. to million, total of in merchants we that the also This of program. And to million with Our we our even increased generate recorded forward. trend would net

have funds, the whenever accounts. transferred you have we to -- analyze to our the accounts profits bank regards [indiscernible] you need that is With pending to to what other still cash, own both and be the from own in

our that share cash million see even you together, million increased buyback the of If $XX you program. consider own again, after buying those by $XX two

is increase the noncash million. that, excluding $XX So in

profit we accounts We our and a own spending is that of released our amount bank have higher because financial compared transfer to April. to in QX, to statements

So of we the the plus QX quarter. we had in amounts basically have the profits

to in this reduce expect We quarter. the following sequentially

Jason Kupferberg

color. Thank you, guys. great That’s

Operator

you. Thank

comes next question Ashwin with Our from Shirvaikar Citi.

open. line Your is

Ashwin Shirvaikar

guys. Thank Hey, you.

as some the processors. to and million background to at about is So your benefit Is kind Or of I maybe $XX this some cash that restricted I did stay to structural decrease the cash on a why and decrease one-off merchants own in guarantees is? and your Could a of the you're of the future? continues sort question presentation, funds, in releasing you XX to because the want Page advancements you of talking of on merchant you sort in development credit this? behind provide this thing this rationale look

Sebastian Kanovich

it? to want you do Maria, take

Maria Oldham

Sure. Thank Seba. Thank your you for you, question.

took assets measures of First mentioned to other increasing. why provide QX, extraordinary we our we see all, to as And in reason the is you comfort this merchants. that

we $XX expect over in reduce have the million is that trend of we this to time. As And mentioned we highlighted. QX, reduction that

reducing. continue to that expect We

Ashwin Shirvaikar

your with confirm. structural try a and so or how to you just So this so your sort on development of and contracts in in transact and other words, of forth, terms is clients

Sebastian Kanovich

Ashwin, this the is a previous of normalization trend.

and and in over to continue normalized would normalize normalize So attack and already, QX QX. in QX. this you told that going under QX to has we it's were We

there's structural require in grow. we no business. to difference So sheet balance don't our

[indiscernible] you Our in increasing. and cash, quarter, current cash see this what generates that's actually TPV our

was a was difference there before distinction So in business [indiscernible]. there dynamics this fundamental was in what normalization the QX, our no happening from or

Ashwin Shirvaikar

Understood.

that. -- is for clear. Thank it the So yes, you yes,

was regards with look profit gross at the fastest adjusted question EBITDA. your to TPV TPV revenue other of growth is course, I sort and -- is your growth, I of adjusted growth, growth, growth as EBITDA your had slowest and so one the The

countries you're time, that. of -- driver investments of the is as as question profit in is than is So growth part driver see even I growth gross growth entering new more of do is why making a normalization slower business for why because your My and primary of EBITDA Nigeria over slower, explanation adjusted into model. a

You this. continue to do

is early already stage relatively you. You Nigeria that for mentioned still

gross metrics, normalized margin financial over So time? a good What level. margin is level of a is in terms normalized what profit EBITDA

Sebastian Kanovich

free to start Maria, Diego, Maria feel complement. and

Ashwin, appreciate question. the I

we very competitors we So in where and this currently It's which it's best-in-class. standing. [technical is quarter. are that When margin consistently get step you been the one I way of some think are our XX%. we think a And had XX% back over see good healthy difficulty], position. We've we a to are report

will to we big very be We and place difficulty], our to take, keep that went are for mistake in of the [technical for a We think we shareholders. want investing. us a for over independence

very We approach. have profitable a the benefit of do very business. a already so disciplined in We having

no numbers we you can we’ve for So already point. There's year. would for say guided what we that now. fundamental any reason this at this why That's change

believe already At that You same no mentioned geographic there's expansion. come. after. Yes, continue [technical it's have I to to hundred we to XX, want going We time, difficulty]. go the other markets

continue We have independence for. do. [technical don't to So which to not optimizing. into want and ability it's account thing taking invest, today. we we optimizing that are that keep to any difficulty] target the believe we We the particular the right to are Again,

Ashwin Shirvaikar

Understood. Thank you.

Operator

you. Thank

from Agarwala comes question next Our with HSBC. Neha

Your line open. is

Neha Agarwala

question. few Hi. so Congratulations much you taking the quarter. Thank on my A clarifications.

Nigeria. on First,

number is I profit margin about Nigeria. gross the X% think provided, calculated for With you the

dilutive and overall profit quite piece to the I profit we total your that it's even gross higher. think higher costs dollar are X%, X% Repatriation is of level? can dollars. Nigeria, gross terms mentioned what in when amount, in margin. at of currently it expect to And but You normalize is

your some consumed providing to are third is helpful growth. Can much. that of question on in second right it how so the And behaving? sense able you That pipeline would Last advances give and to my on you in funds select million are how very that the color. to merchants. million quarter. XQ Thank own the assume this million merchants you have of since quarter, $XX TPV Is balance. you were good question $XX you $XX us on XQ for My visibility cash very be mentioned is evolving release you the

Sebastian Kanovich

Nigeria will for questions. with Neha, Sure. Thank you, start the one. I the

margins to switch run. don't value We that's long don't what the we want, than we think to it thing will we to Nigeria means what our Nigeria brings think right That's We rate if take profit margins. go gross higher average. do. Nigeria, in and net creates that our for. off is Our Tomorrow, that thing our dollars dilutive Yes, It optimizing business. XX%. to to smart the that's a is for don't that's do. are think I

margins going We How to normalize? fast know. to are don't those going

our develops. want the time think great We to we to market right structure. We the also margin at this company. for we business. product how our customers to this function optimizing how the don't long-term. not again, scenario, over develop It's to of even expect our in that's that think And for do. continue the a our mid how thing a business are is business for develops, We normalize do the to today, current But

Nigeria revenue contributes every market. the that's and worse a XX%, I but much, The being are morning, switch tomorrow But are margin our our see we we why lower. the profits dynamics much you company. off at behind to jumps That's a first different, very other is question. margin similar see than Nigeria, level it,

cash, of terms Diego, let Maria I'll In you take. or

Diego Cabrera Canay

Neha. Hi,

own the is we own $XX to a that we our and $XX estimated follow million, cash quarter. haven't That was had, if December. buyback. share in million, invested of of profit million that the bank you of profit approach our That million grew after the transferred transferred. before We yes, So, the the basically $XX plus bank We what in about had accounts. the have own transferring very we at profits accounts cash, end still quarter, is we that $XX to prudent at include the our

So we we make audited have that sure information.

filed the were Keep quarter. audited April closed that after after first QX in by the quarter, the financial we so statements QX numbers audited our the and mind both we

the funds that a substantial profits and being pending transfer in the we transfer or we as those part of we expect to During those still QX, generate funds to accounts, results have to quarter audited. always are will bank our

Sebastian Kanovich

we TPV, multiple and you healthy quarter, are your been a far in geographic never it's product seeing on ever a so mentioned we've trends healthy look are Again, the before, the pipeline. last been. footprint from very very standpoint geographies. we seeing company across I at standpoint. point past, this our I've when And said better the a best in merchant it's base, Neha,

we a going as And QX visibility. sense said, are QX have good our and about numbers of forward. you yes, very So we optimistic do our

far, so positive geographies. And everything multiple is we've different very seen across

Neha Agarwala

Can Diego the you. me. with on Thank I just not it's to cash, follow-up very clear

which with in million XQ. was $XX up this still up was that So $XX quarter right? used have merchants, going coming that in million the released be to and you Of $XX released some million tied quarters. is Is

Diego Cabrera Canay

the if I'm the a But follow you not if restricted basically, different I are are you talking Neha. one. sure about numbers cash, that's calculating,

Neha Agarwala

some advanced The to to to no, million about is In guarantees or own not give give million talking you of $XX $XX you used mentioned I'm okay. wanted comfort, of select fourth No, right? receivables funds restricted you cash, quarter, fine. merchants that them your because

Maria Oldham

Neha, $XX it's million. actually

Diego Cabrera Canay

in also measures QX, and had includes million in periods but we reductions are QX. other $XX settlement that reversed some that probably we in already Yes,

Neha Agarwala

Okay.

Sebastian Kanovich

Neha, we the and point that's were raising.

those of are normalizing. All trends

normalize So normalize QX, QX, and them and QX. expect we continue to to in in QX they

Diego Cabrera Canay

grew in inflow we also payables also that settlement you normalization normal, part of we also If TPV, receivables, that and of you merchants look see but that have also million of the improvement will our went grow the an that cash. or as at back we of our to cash and periods as $XX trade our net flow, is increase

Sebastian Kanovich

last And, Neha, I want to emphasize one point.

important. this Sorry, I think is

sheet us for require Our balance business doesn't to grow.

So growth, it's accretive.

funds see going we receive the then and up we before our We capital. case. that working why you settle negative cash and the That's consistently. have remains We

Neha Agarwala

the period Has after reduced the quarter? settlement fourth

Sebastian Kanovich

No.

Neha Agarwala

have to period. XX still settlement X you days So

Sebastian Kanovich

No, no.

Maria Oldham

The period [indiscernible]. improved settlement after

We clear. have period a to settlement be longer

Diego Cabrera Canay

The in the also and payables trade QX. the settlement $XX net TPV increase, of most receivables of reduced million cash of result as in increase were you normalization but periods have of a

Neha Agarwala

periods why the settlement Then has increased?

Sebastian Kanovich

we settlement later. merchants increasing, period it's good pay It Neha, means a that thing.

Neha Agarwala

with increased, Yes, because the to why thing. leaving confident shows period I'm trying cash just why more It just good a up. to has as your average I'm that's period and has settlement it that good are merchants settlement has thing. it's gone understand But a It’s a it's higher Nigeria gone you. definitely curious your why up?

Sebastian Kanovich

in back a seen settlement have and a you're you decrease now periods, because seeing level. No, previous normalization to

Neha Agarwala

Okay.

and decreased going to now is it it quarter, then fourth back normal? after So

Sebastian Kanovich

positive in yes. you a Yes, see trends the trending direction, all

Neha Agarwala

Okay.

much. so Congrats you Thank Okay. again.

Sebastian Kanovich

Thanks I it. the appreciate for question.

Operator

you. Thank

Matthew Our next with question [indiscernible]. comes from Cook

Unidentified Analyst

for taking Thanks Hey, guys. question. my

would total about me. activity doing assuming say if And were you like sequential growth volume on Nigeria. math, about of spending thinking annualize Nigeria one e-commerce say, total annualized XX% take consumer billion were like like right. a for of quarter-over-quarter. that that volume, here, so in Revenues rough that Another you're to X% gross from $X how we from points rate and Nigeria, Curious be X% up some XX% of And there.

pretty penetrated far you're that it seems like So in market.

from some So provide see I was how growth color of you additional like just on there. hoping could kind like that you

Sebastian Kanovich

much your very thanks question. and Matthew, for Hi,

in other before you So obviously, I've markets, it step don't about grow said function.

a faster. you And bit So a see you our typically, linear. quarter growth is little not go where

normalization then disagree seen the and past have You've of with the and again. penetration. to in it share you terms I those in Please growth stats.

we the From base with that are surface the even what have only merchant today. seen, scratching we've we

XX. us out TPV of more capture. the standpoint a from of X to only for our operate in So Nigeria. relatively us business And XX small out with therefore is in Nigeria, top There's still

that come there's significant believe growth the over to years. we So

optimizing for with we sense, saying for. next long-term actually come markets extremely all optimizing not we in quarter, are Nigeria, other compounding confident. but what that the the going we it's And that's that in are to not growth operate. in are we're And We

Unidentified Analyst

second could helpful. of opine a hoping like little growth volume you the That's in super that Thank was robust. of I [indiscernible]. be more mix on question, terms mix my kind as to well. And just vertical then and geography pay-out continues you bit really

Sebastian Kanovich

Sure.

again, product one we over other. for optimize So don't the

quarter, Last it down. You've cross-border mix going up. was seen in going quarter, this

not are or other. one [indiscernible] we the and -- So

many Education what at a of sorry, it's it's [ph], across the of of a what Ridesharing sense. pay-out are Growth vertical speed. payments that in vertical in for dynamic for But pay-out And fundamentally, payroll agnostic board. pay-out more us. strong spread kick are commercial We merchant. strong same in the -- customers it's us. is

one no difference -- So country mix the versus in from there's significant standpoint. it's product other a dynamics not

like not there's pay-outs the So much and cross-border we really way complementary. this. same it's product our more color the add with we are highly But complementary in local-to-local can pay-ins, because

Unidentified Analyst

Helpful. Thank you.

Sebastian Kanovich

question. for Thanks the

Operator

open. is Line

Soomit Datta

me, hear you okay? Can Hi.

Sebastian Kanovich

do. we Yes,

Soomit Datta

Sorry.

for a Just me, couple please. question a on hedges. One, just the

that a press hedging the financial for activity, result in see reference we the lower better release quarter. I a to there's in and think

there's economies, with explain case? Just wondered inflation If of be exposure more That's why please. would kind that? you second a that come I'll back one. the first higher to the given help could question,

Sebastian Kanovich

Sure.

who is Sorry, this?

Soomit Datta

Sorry.

Soomit.

Soomit, New Research. Street

Sebastian Kanovich

want I do you it. appreciate Diego, take to Sure. Maria, it?

Diego Cabrera Canay

Yes. Sure.

the situation During the there. second of half Argentina. in we we particularly that the exposure, the reduced our We normalized sequentially quarter, told you in year,

Argentina. a every have that very have low positions positions, positions currencies. practice So that And -- we lower local what keep you much in open basically, in during hedging mind QX is we reduced we happened in of

reduced we cost keep dollar we hedges any of that investments. we the available have So

you numbers because see results in turned that we of we the financial will quarter, during and the financial came to around positive So results that.

Soomit Datta

again, please, quick Okay. a Clear. just follow-up, to then back And Nigeria.

things margin hopefully on trying you of gross that FX to away that the as discussion, which costs margin down or costs to obviously move simple, keep do do kind But higher merchant? profit? time, to take rate. keep just you Or gross the processing the come over to pass relates the from your Just and

Sebastian Kanovich

for question. Thanks the

gross typically And always say optimize first that's why we profit. we and the it's the for we way we we price. costs price, So then understand

more share liquidity, understanding for get closer part, to The to we cost a better contracts should will our the our that other can tied -- to with merchant, access system, that the most will of are of of So own down, the our part efficiency. we that part merchant costs. better getting not, [indiscernible] go some terms, getting significant be

So us. to that upside an be would

Soomit Datta

Okay.

will your And take so rate presumably, go net then? up

Sebastian Kanovich

significantly. up potential has the to go It

Soomit Datta

Yes.

you. Very great. clear. Thank Okay,

Operator

Thank you.

Our next question Barclays. with comes from John Coffey

is Your open. line

John Coffey

Nigeria. my And pertains taking Thank some volumes. starting you my verticals quarter, Last see another slide. you're call. very to which much helpful the of I you really, these have for Great. question really a question yet in to gave on

XX, Page of showed XX% think TPV you that where your I financial was in I services. think,

verticals? Second kind Is one verticals? of Is biggest slots could of those? all give into different across it was commerce. any out the there on Is really color bucket Nigeria spread you where it completely

Sebastian Kanovich

similar very for Thank question. very than diversified, dynamics the you overall well It's our business.

this. that's of good So out XX why the for signal X a is merchants

very our Our XX X and applies well the are -- diversified, top same to Nigeria.

has So prevalent us. vertical particular than no more

John Coffey

one you. quick follow-on. And Great. just Thank

sort that markets Indonesia same big view efficiencies? I you those think really they're and complex you your mentioned two I beyond of seems look said do have Morocco as Egypt, that you that before, markets does value. say in to and complex we And markets, When kind to may category developed more think you where opportunities? that the there's Nigeria -- next of -- are this -- more real Argentina's spot adding navigate versus more those and and be would sweet particularly where for

Sebastian Kanovich

Sure.

market. It emerging see operate I'd our Brazil case to people realistically. now That's to specialty. are developed we they that people we of across the That's and we all markets, So think that love now launched. as XX when where -- love complex I'd exist. think a wasn't

friction, plenty see abstracting plenty and come we and of it business our of to markets. in difficulty] friction And whether of solving not emerging friction like for in it today the we we there's So or merchants. are the [technical

are So falling that's they what for.

Egypt, just to Mexico. a around Morocco, Africa, few, South the name be be Malaysia, but And around yes, Indonesia, said same said same Pakistan. could could the

of So for solve. us there's to friction plenty

value to value for time, to company. we a our at same manage we of it, add our As solve the typically some lot that capture and of customers

John Coffey

right. you. All Thank

Operator

for time closing That's to you. back Kanovich the the like Thank for over remarks. I'd call have questions. Sebastian we turn CEO, to all

Sebastian Kanovich

on to It the I for being why focus helpful. that to call. investing long-term. on want much. I today. continue Sure. efficient to build today's That's would geographic [technical was listening hope business to this we the this everyone very here I product us you making see Thanks reemphasize in that Thanks, for just difficulty] to growth. like and everyone, was to and pressure make short-term. a

opportunity We for multibillion rest a are much coming seeing Day to your for your we on about and we I Xth all day. extremely after you and Thanks revenue of And forward all enjoy the [indiscernible] have on want Investor questions looking to are excited June. go huge very your thank and time the a market the you over such build comments. the of to our years.

Operator

the participation. Thank you program. conclude for your This does

You disconnect. may now

DLocal Limited (DLO) 18 May 232023 Q1 Earnings call transcript