DLocal Limited (DLO) 16 Aug 232023 Q2 Earnings call transcript

Company Profile

Participants

Soledad Nager	Head of IR
Sebastian Kanovich	CEO
Pedro Arnt	Co-CEO
Maria Oldham	SVP of Corporate Development, IR, and Strategic Finance
Sergio Fogel	Co-President and CSO
Diego Cabrera Canay	CFO
Tito Labarta	Goldman Sachs
Jason Kupferberg	Bank of America
Guilherme Grespan	JPMorgan
Ashwin Shirvaikar	Citi
Neha Agarwala	HSBC
Jamie Friedman	Equity Research
Matt Coad	Autonomous Research
Kaio Prato	UBS

Call transcript

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Operator

Good day, and welcome to the DLocal Second Quarter 2023 Results. Please begin.

Soledad Nager

Good morning, everyone, and thank you for joining us for the DLocal second quarter 2023 earnings call today.

If you have not seen the earnings release, a copy is posted in the financial section of the investor relations website.

On the call today, you have, Sebastian Kanovich, Chief Executive Officer; Sergio Fogel, Co-President and Chief Strategy Officer; Diego Cabrera Canay, Chief Financial Officer; Maria Oldham, SVP of Corporate Development, Investor relations, and Strategic Finance; and Soledad Nager, Head of Investor Relations.

been accompany has prepared presentation slide provided the to remarks. A at via is be both website being event webcast accessed broadcast DLocal's may This presentation live and and the through investor.dlocal.com. webcast available shortly recording be The after will event is the concluded. made

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

for given expectations, While on Securities information, currently DLocal’s the DLocal’s Investor results reasonable discussed which believes from projections company the section risk reasons, to variety on factors of described and those reliance included are materially those DLocal’s available Actual statements website. or available call assumptions, are undue and including not with filings our statements. cautioned may Exchange and you this differ presentation of in are in Commission, that the place forward-looking a in conference Relations those the forward-looking

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

Sebastian Kanovich

everyone. for call the Thanks joining today. morning, Good

Before let all joined who you back me Investor we Day call, of the in thank June. the start

the those Relations couldn't Investor available website. For on who our it's material, it, make

that who as add in also me joining Pedro Co-CEO. Arnt, have Let call, will the we me be

excited have We are extremely team. the to Pedro joining

we complementary pace us. of that enormous company, highly the business We are a scaling will that example realize great and have helping this. energy Pedro ultimate leadership ahead us the to the we talent and Pedro have proud skills bringing continue bring of of the at DLocal, at of to opportunity to is and and set new the

Pedro invite himself. would like I introduce now to to

Pedro Arnt

do Jacobo, They performance to today through the DLocal. greetings, DLocal’s business rest useful the Sergio, as for and strong team expertly share you me great quarter. will of Seba, to introduce it'd us every then be with Seba, at everyone. thought they led what's here Thanks, and myself join and We me walk

its Latin seven been Having ago. XX the I've in inception merely tech American over last years, since years obviously worked DLocal of aware

by diligence, I'd upon today. more of business my undertaking to approached I initially for those anticipated. success spell I being was However, set out the some found and of drivers had even like remarkable a Board than what you

a total First untapped of market within currently all, markets $X.X rapidly vast that of expanding trillion addressable serve. the we

And growth opportunity as an Second, TAM increase alongside reach the markets us our to five next times our for the over extend well by markets. exceptional potential over this as these to years. numerous to allows additional X.X

and the customer our that's to win, net customer CAGR client and of and phenomenal product it fantastic profit Third, equally a model certainly over entirely cash by most fourth, many success to important, past this income CAGR And over an adjusted up continues an centric and stack gross client XXX% revenue technology the serves And of and win TPV an is pile of but flow characterized obsessively attractive free XX%. clients surpassing the conversion XX% dedicated demanding by by organization a CAGR last, over as annual three XX% extremely tech EBITDA financial is world's exceeding growing XXX%, mega-cap leading companies. to years.

fully Absolutely. an we successful realize a just winning always for further are any most prepare design company, hope TAM, organization, future. extraordinary free investor's confident in But further in here. adapting contribute more of tech machine, we and is DLocal find in So even exceptional to essence, inherent with and product can the out great done even underway, there organizational and also so a I vision processes, young pace as described cash to like ideal the business large That it's value that stack, flow ways I'm and and rolling to will the work customer systems at to Right? my additional our accelerate I've the you. be to focused already deploying X more work better which and realized. Phase is where journey the

how I'm on customer excited of stakeholders this the this formidable that believe will to with look forward will company these trajectory to propel further at we returns complement product scale. we for firmly journey. I as further out carry DLocal's we as to And engaging clients happens, undertake see all you all already measures, that’s unlock extraordinary involved. and being work the a success done all and behalf build this as I

things deeper now Seba over the me the results direction show of positive floor that are turn into to headed Let go the again quarter in. the already to

Sebastian Kanovich

And you, to Pedro. welcome to pleased again, another outstanding team. the I once we've that had quarter Thank share am results. of

superior geographies. with we which once a over our business, XX for and our performance the to technology with our commitment continuously excellence. driven well-diversified a And disciplined Our business but geographic is trends proves relentless continue strengths complex what for with API culture. all across call These coverage profitable verticals growth. simple countries. strength lean three, again one make of not we One our DLocal. one, deliver Two, merchants and our our striving focused products of across least, previous on products instinctive vast and team, that and the combine, build the strategy integration, merchants by long-term execution sell Last geographies, cross lean to and one We growth of

Our key to our continue delivering culture is long-term on ambitions.

behalf One can remain business. Based ecosystem across in factors merchants, success markets. best these on markets core our so they continued These of focused on of underpin the the in our on payments their building our complexity DLocal, navigating payments emerging

growth proven a adjusted deliver net TPV, have to We factors these record in EBITDA track gross revenue, and profit, income. leveraging robust of dollar

went first To is before in more surpassing this double the highlights financial This metrics. public. this XX% year the the for time we quarterly year-over-year, our the the billion was strong success our across TPV for all mark. XX% than TPV to quarter. a perspective, reflected XXXX. Moving of TPV grew whole $X and quarter-over-quarter, of put year

business focus in We profit quarter-over-quarter. absolute EBITDA, double to all our adjusted increased on terms. Revenue, at and year-over-year and continue both gross digit rates, dollar growing

We past of EBITDA $X gross remained ratio remain We highest committed our which profitable eight quarters, is gross contribution the EBITDA scale. to quarter-over-quarter XX%, profit at in stable EBITDA adjusted at recorded again quarter-over-quarter. adjusted adjusted in the to $X profit class. increasing and in in QX gross million In of profit XXXX, and million firmly growth best

slide, thoughtfully next invest continue Moving expanding team. our to to in global the we

time strengthening see compared long-term our market, our of This the to also pursue XXX We face XX% in to employees. employees We is the our have or quarter XXXX foundations hired new XXX we year-over-year. talent to ambitions. grew second increase by to opportunities an full team

continue an We well on-the-ground to skillsets talent as recruit globally, specific experience knowledge. combining and

Asia XXX Africa in the QX and This time full of We employees XXXX. XX% reached workforce. represents by now end our of

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

We believe are team is than stronger ever. it proud and of our

strategy. execution Maria to pass I on growth our our to on will discuss Now

Maria Oldham

you, Seba. everyone. Thank Hi,

view me you engine. Let our we growth how remind

merchants, our African we and direct operate, two, in focus payment more this also and our continue have one, in quarter, We on by on a product, focus On connections the and deepening continuing growth, with particular we efforts of which to three, Asia, presence product, and to three axis acquirers establishing geographies. with our during countries enhance methods solution.

we rate During saw merchants, Net from and be strong delivered retention best-in-class quarter strong platform in both commerce particular, XXXX. growth, to marketplaces. solution, continues On the of in at from existing customers. XXXX, XXX% QX second we a our traction on revenue new

New million merchants revenue QX XXXX. in reached $XX

which to together We them. have with very enables close our relationships with grow us merchants,

merchants show high growth, to XX top million quarter. revenue very continue the $XX in Our totaling

axis three growth. growth deliver Our to rapid of compound

API. methods of linked merchants' and without growing customers means high all merchants markets and value business. any access work, products All can while one of our products, our our our methods that generating This payment are to payment additional to

continued XXXX, we both across ample experience of QX region largest Now Latin proves geographies. to merchants. the dive from one in where year-on-year, with in LatAm, mostly growth in strong for in by XX% let's dimensions, existing streaming, Brazil deep XXXX. America, our year-on-year. and been by have In still the advertising, and we merchants through into Mexico revenues XX% hailing Growth ride scale, by last increased growth QX have the that we months room This In commerce, XX driven in both new and countries has verticals.

both since in countries XXXX. been have operating We

are have Latin in the even true markets. will it in most mature growth hyper-growth still rates sustained indicator that potential the our So America, of

we market in also is terms where As started large we such from you It developed the technology, but of market. from growth and know, this in to in payments as Brazil, seven is high highly a mature solution the digital penetration This geography, growth of standpoint. markets a is as gain competitive years far continue underscores share Brazil opportunity ago. quality and our

of TPV also We both growth our local-to-local we we a have and continue Brazil doubled forward. merchants been commerce, quarter-on-quarter. opportunities revenue XX% in has XXXX, around see and by to by Brazil and QX mainly strong In in the going year-over-year growth in increased led share, cross robustness Brazil local-to-local favorable and trends success market the with Brazil, border higher In in proved local-to-local verticals. streaming seen solution. and advertising, and flows. is Recent

Africa to Moving on and Asia.

Morocco, signal and Indonesia to significant year-on-year continue Philippines of our solution strong for business. our the Egypt, and merchants part are growing to the have digit region. in potential Our become a triple demand

XXXX, three to year. times Africa in very months business grow QX more Africa to year in Our increased the and Asia Asia In and fast. on than last continues XX revenues

Excluding grew through XXXX, XXXX. increased four last QX by year-on-year. QX revenues XX% times XX than the more Nigeria, year-on-year months this In Nigeria region in

it by present driven key as of quarter. other the net deceleration the continues Nevertheless, for quarter-on-quarter similar XX devaluation days a the markets, Nigeria is to The naira and DLocal. in take geography was last rates

the to continue growth market. in opportunities great see We

Sergio effect, presentation. revenues shed recent will in been market XXXX. the light would in on QX line later the more on this have changes Excluding with

onboarded study of global XXXX. slide. service. prior Latin product merchant to growth. e-commerce Moving the outside trades in QX to and three platform, the merchant, powerful combination for started only our one This this our of processing We axis country next case volume and We one this America

solutions wallet, and geographies. methods, of on pay-ins TPV has we few by driven services. years, a to been speaks sell and our of, three, in America solution merchant of grown Latin pay-outs these successfully this across than our since seven top share volume by merchants, processing for XXX outcome and organic last geographies. in have Africa two, itself. payment increased able of now uses platform process and products, XXXX, new one, We additional merchants QX geographies, of more this countries and combination cross some growth times The the for Over

strong solution and to have flow best platform continue coming label compliance global tailor merchants scale, solution built This including, KYC, choose with is solutions the throughout full experience. two, process and and made We ensure growth the testament from user on and with customer that have service a our we grow us. example seen payment is our at onboarding the we one, relationship a develop white the great as business solution seller split a together fact to our who to

will discuss updates share more depth few emerging Sergio of markets now our some key on our focusing markets. a and

Sergio Fogel

Good Maria. you, Thank morning, everyone.

member. this team. the and the today company, have and meeting to delighted I join continuing as serving many June executive lack earnings I DLocal forward have the emerging since transact a potential. know, this you I we markets growth to of look and fully year, Board and see see am have its part is due co-founded call been been markets infrastructure, devoted As sellers inception. overwhelming. Where complexities, magnitude you. Buyers of has cannot others high of the opportunities lost with of to to been underserved Since

going growth, seven are this the very we are scratching only strong opportunity. and a after still large We after surface of of market, years

connected products starting Our markets their for tastes. and only an needs growing complex. class to are tailwinds, that middle young Emerging their a markets enjoy eager population, merchants are structural and customize consume, urban to

complexities payments operational, solve our Our and regulatory including, complexities. technological, mission to merchants, for is

circumstances our of strengths one Our proposition adapt in our underlines change operational of ability taking simple. and complex is value the and it to to key making

for recent the stated as the on government in specific the you and update such established One to currency in new central The Argentina, in like I'd bank to market obtain conditions in procedures certain three markets. change in filing of late we occurred developments April. Now, settlement foreign services.

be in probably been now, not have Argentina the many years changes the for This many and will We have is regulations. and latest seen change operating we last. many, only in

as we just We new adapted the will have ones. to to adapt rules the previous

ability value our competitive the to a to do is merchants. we an add Our and of so differentiator example

magnitude release June, of We country. acquired the additional end We we funds our XX, Argentine operations in worth plan million own additional dollar linked following On we $XX funds the July. announced in show committed in business acquired years treasury opportunities Argentina, of to in June as to the the our substance with our of an million the press Given in our to economic bonds. in fund $XX use investment by and market. these local we

We the are international able collaborate macroeconomic to continue authorities to Argentina with ensure services. local despite to access situation, customers in Argentinian that

the see the as to unification devaluation to policy Nigeria, Maria free-floating Moving the the transparency of to for our that it the removes a liquidity. I some that central friction and like we the country mid-June, for see increases of naira, Nigeria. efficiency, customers when expanding positive leading a it of mentioned. as would exchange and and business bank in lot implemented currency our of promotes local a to the as the This rates of highlight

operate costs. to The have offset largest revenues merchants. technology normally We country do be the impact on expatriation on of profit. to the naira some serve continue lower the gross expect an of where depreciation our in the will world's by we not gross negative impact We

to continue onboard run operations bullish the Nigeria We and and continue a outlook in grow merchants country. on for with in long the the have to

end Brazil our am I Brazil. Day, in another for we payment we in payment of in a Payment that thrilled in participate more Shortly license but Investor reached to we milestone and shared granted At Last not Brazil's share evolution. applied the our this Brazil. that license Institution in we least, directly now systems. can and We after were offer July. QX, solutions methods

welcome of Becoming compliance Payments well example advantage. continue our confidence circumstances strength efficiency our also business efforts our regardless boost Brazil emerging of Bank. it over a helps carries high in country. further Central any We Institution higher it operations a expect increases our the to countries, increase business. strengthen to this of other and with We the level a by in as global scrutiny level Brazil in and scrutiny markets doing of in the ongoing infrastructure our merchants This of markets the This is growth Being us emerging in to benefiting competitive is XX specific given in of diversified across of very allows clear key emerging markets. from geography. such a

now review will Diego our highlights. financial

Diego Cabrera Canay

everyone. strong and We Sergio, hi, you, across products of Thank had another our growth and quarter services.

hailing, last companies. we media, service mile ride the position payment Moreover, In pay-ins social providing pay-outs markets on-demand financial from by and quarter-over-quarter. by services increased been for and services have and XX% in payment pay-outs in year-over-year has XX% successful global emerging products, during and QX ourselves as year-over-year to as companies provider XXX% by choice markets. quarter-over-quarter terms in we emerging increased continue of of increased contribution payroll, XXXX, The to delivery year-over-year, XX%

quarter, we Brazil pay-ins traction Mexico. for in and saw through this our e-commerce solution marketplaces, also particularly platform both During pay-outs in and in strong

in In growth terms commerce, QX XXXX. show cross ride local-to-local and hailing in our growth This and XX% quarter-over-quarter, of from services, volume quarter-over-quarter. our merchants solid share QX by local-to-local verticals. local-to-local XX% XXXX, advertising, mainly reaching volumes we resulted border driven increased in In and by our year-over-year

us. as when of a All and our which growth of We Overall, strength. merchants the a they quarter, as Depending pay-outs services border are we and combine as pay-ins merchants and cross product each our the versus diversification onboard and for profit merchant, in see and vertical our synergies given well fluctuations in incremental see all bring growth both on bring agnostic. we products we are them, and across key many the local-to-local. positive and outlook versus relative share there rates services a products for

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

quarter-over-quarter in and which payments growing of Costa South metric ride processing on-demand And is key our the in quarter, quarter-over-quarter standpoint, profit Peru, During growth, gross dollars focused this Mexico, grew from from Brazil, revenue Rica. revenue business. online saw Egypt, success commerce, Colombia, remain a We particularly Africa, strong hailing and mainly on we geographical delivery. absolute

Our in rate up gross take net profits with year-over-year quarter-over-quarter, QX, at XX% reached $XX XX% million and X.X%.

our waterfall share profit in offset local-to-local Processing X% cost profit by merchant on over quarter-over-quarter. was higher and and The remains the local-to-local impacted revenues TPV volume. at stable changes profit net Brazil. quarter-over-quarter, remained of quarter-over-quarter. high gross Gross in a particularly left margin pay-ins of take volume increase positively in by the This mix, shows changes in margin and rate Gross unchanged share was with the lower even chart almost share in margin of Argentina. the main

hand right net in share higher QX X.X% and Mexico X.X% with slight in of local-to-local the revenues QX lower by volume in The a particularly Argentina. the higher mix, by the slide. from to driven priority. of XXXX, by similar Moving in of decrease in factors, and and top Brazil was XXXX Profitability to take a share remains country rate

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

people, EBITDA we both Our at stable profit continued investing remained quarter-over-quarter XX% terms team. over expanding in compensation and gross in adjusted as of our the

of growing hedges in totaled our gains. million by markets, funds and held offset financial accounts Net income $XX by market. partially money cost it were the the for year-over-year. million financial driven across net quarter by the of Net includes bearing XX% quarter-over-quarter. increased $X.X by interest quarter, Sequentially, income during results the XX% These

to as share local from profits by QX, in increase income in markets effective an local-to-local gains. a financial and result of a driven tax of saw XX% XX% in also QX higher rate our TPV, in We higher

Let's to cash move generation.

substance During increase income, of result the business our a our merchants. an cash average of substantially the cash observed with net working year, to higher generation. months trade settlement We increase as our drivers to country. of million six cash first in We our and were bonds payables, we business. cash, as treasury million in allows to flow completing resulted competitive we invested million. repurchase our of increase $XX investing the an a to as a this particularly program main position of $XXX economic commitment share strong in period us and capital, the our the growth dollar-linked our in of in advantage Argentine our believe This The remains part in strong continue $XX net converted negative increase and

yours. is floor the Seba,

Sebastian Kanovich

Diego. Thanks,

We the we set of we more the runway are the half We and about in proud are of of excited first very during the ahead of year. us. second of the continuous results the business see year of strong half delivered even our growth

we on Given the over-deliver six EBITDA. first revenue, on of line on our outstanding while would months to guidance in performance, track be being

in Nigeria, due our affect and reduce EBITDA However, neutral with $XXX million year impact other EBITDA. of in to revenues between we Revenues which line $XXX depreciation profit, with adjusted dollar end million, the in currency on the revenue won't and million it million. of gross amount, range to gross profit in both guidance will and words, in the to terms $XXX $XXX expect

in complexities circumstances changing financial deliver position. a emerging the goals in our to navigate business specific DLocal big in focused clear continued We dedicated emerging in truly to you to pleased improving want under receiving and our we global One proposition for I our and best markets. of customers support. that a building very, such our their thank markets have infrastructure this value for to is proposition. help merchants are markets. on value Everything on can team, merchants payments that our diversified a send further and platform investors remain is global local sending be do very to We The we certain our in

which back the hand to Q&A, also operator will now Pedro I'll to joining. up open the be for

Operator

[Operator Sachs. from Our comes with question Labarta Goldman first Instructions] Tito

line open. is Your

Tito Labarta

strong coming some the on MELI, to several congratulations you Thank my comments you for new from hear Pedro, Pedro, the thanks joining if results the morning. you, taking role. strong on in I well-respected of with gave questions but could see Hi, A from you good -- I of if questions. and call the company. questions, gotten from love and hire and for couple you may. Congratulations DLocal on very start we’ve we'd opportunities -- Maybe

to talked a that. Just to on much bit hear to Co-CEO you would at just DLocal? little about love to that make understand What a you here from reasoning switch? I excited the role, personal bit come hear little but love of a to opportunity the would sort so from a more coming mean you to bit little over perspective. So

it’s And strong more from question is as several the on But way that of the particular to bit well? little a Argentina bit Seb, do we you. headwinds volumes and local-to-local going giving Brazil Thank a maintaining it And color. the you're a to second think like full-year saw And guidance in of basis on then merchants that lot revenue on as expect quarter? of can how the depreciation coming you little you to Is there. to understand there? like continue dynamics the mentioned, revenues, performance because some here? evolve one grow it merchant? very a quarter revenues, from growing this get Do Just next some are you

Pedro Arnt

be the to for Tito. Thanks here. everyone. great Hi, It’s Hi, question.

focus laid attractive expanding model. with I is right customer prepared a out technology TAM, sales business organization a super a remarks. winning think I great product, large and the and in phenomenal it financial This and a the

to today. tech what Latin I've last from few American I've build like to it the And have how years I think is zero company to over scale. and tech where XX seen in Latin privilege I've a because American had I've largest So is seen What DLocal is gem. nearly done had others the at work scale the

in is generate and professional the over you technology generate a and is over channel I to building compound term. think career long next phenomenal landing scale DLocal the a way results in a value operates be results with scale next the my how -- TAM long compounding seen and a time for financial business in And that ideal spot by the model. leg growing able to I've And has

extreme a great is can that decision this think to done makes at sense me. DLocal. being add I of for So And I lot work that's the value here a

Tito Labarta

Pedro. Thanks.

Sebastian Kanovich

Tito. and for your Thanks, question. Pedro, Tito, thanks

there's Please lot So me know if let to there. are we a unpack covering everything.

On the the guidance question -- guidance we are of I'm sorry, half results. question, first in so the very proud

our went We clearly are our have since know which such revenue, of metrics to not we are one the have macro We higher preferring but conservative changes we to guidance more our Nigeria constantly to the abundance over environment. terms all that circumstances quarter take customers. but would towards on trading approach of of revenue like affect Specific yearly in the ago. given guidance of devaluation overdelivered guided end as of profit. update years this, number, clearly of we gross public see out before Tito, you two we a

and thing guidance is again growth guidance for other And the resilience the close a is. our the well the testament diversified that business say best-in-class margin. XXXX that a provided our this and year-on-year great at the to we of outcome for I'll yearly accounts XX% And is --

to which margin CAGR XX% thing best-in-class. XX%, level a profit other gross guidance at say we'll again are profit a of midterm and do is reiterate gross The EBITDA we of that our

our grew was little XX% those mature I some two underlying that have and where call of compound year-over-year, great We they grew drive a others, than Keep and geographies more bit XX% because close to is XXX% on continue our year-over-year. here merchants. Mexico market they in is geographies for continue qualitative and the it they growth. one going Tito, Giving dependent to quarters most of We're comment, message to at grow also faster continue perfectly going our Brazil think quarter-over-quarter is our I expectable. growth out mind, growth to but are merchant that's and And our over news. to to differentiate

them control some And decide up nor we something the of versus want one faster country And we to not other. ramp will to something control. in that's

growth. at There What want that that say we we levers time. good to And this are multiple have growth the that was in a several working quarter same merchants of that. do testament is sense, for driving

We relying particular any on merchant geography. not particular any across are

in that great, quarter us. great for a sense, So

devaluation. You dollar I question the worth only are that you -- on. we I'll commenting have But to remarks Argentina merchants in on is global serve Sergio, had a on some that this think probably say merchants global know this on you thing amounts.

think what dollars. typically, So if reprice devaluation, fast. we've doesn't there's certain their typically being to streaming a a product pretty the their And tend really big amount the worse of our of reprice other product pesos, devaluation, a there's merchants seen over of services years whenever In being is fast. worse words, XX they think

Operator

Thank you.

with Guilherme Our next from comes question JPMorgan. Grespan

is line open. Your

Sebastian Kanovich

I'm listening. the Operator, but next move to question Can it's not not me, we [Indiscernible] I'm sure Thank if you. please?

Operator

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

line is Jason line is Kupferberg, Your open. open. your

Jason Kupferberg

question. morning. wanted just on Thank start I Hi, new the management arrangement. for the taking you to good

Pedro, day-to-day just Just do on bit how little you Seb to maybe on to want duties maybe kind a opportunity ramp and especially if of the foresee has comment once going the Pedro business? splitting up forward,

Sebastian Kanovich

complement this. Pedro, Jason, free to feel Hi, sure.

Pedro all, extremely me of complementary first Jason, and have So backgrounds.

and him a plenty finding an challenges Pedro absolute join, you talent have Ours an the no-brainer whenever of ability has for like us. tackle. plenty, getting opportunity we that to it's And is of to need that

complementary, undertaking. going fundamentally, the We in be perspective, of very to us. us are be better each still are we of very, But workings for from the this one couldn't a that exact is path news trend and

Jason Kupferberg

my then was bridge on showing slide -- And that Okay. on the question had gross the you margins. helpful second just

fact a second adjusted the half perspective, half recognizing thinking you're that for mix a from just I second -- you on of the guys a mean unpredictability about gross the there's working are Just and assumption year? as the think EBITDA margins context about you guide of sort what Thanks. reiterating the for in case obviously of obviously that kind base

Sebastian Kanovich

that have you were remarks they were Pedro, know, that? making and you then you for I and to if go want short, some quite

Pedro Arnt

I no. was reiterating. just No,

we'll governance the that built throughout confidence gives that plenty there's our the the with be team of to figure will I I've me diligence not think work but I only out we obviously think, my and entire process. complementarity, done make chemistry with easier. even and Seba, here done

about So concerned not at I'm all that.

Diego Cabrera Canay

a guidance, we Jason, be very question known to are on front. company again, this on your conservative in

extremely the an given environment. We market are approach conservative taking

higher want opportunity to differentiate. We to is as on. approach in invest the to invest to that had. the growth. emerging flexibility are this to And trading revenue it's XX% disciplined guidance the they're focusing year-on-year -- of see retain markets want much We have. maintaining provided. run. again, we midterm And over is We The we we of that flexibility to emphasize guidance. clearly We and fit the guidance as retain for what us always we XX% This building long XX% end best-in-class. CAGR, that's And the the we shorter-term are continue don't time to than provide towards ever, opportunity while want bigger I for believe that the we've

Sergio Fogel

part in the decrease If the look to mix. rate business X.X% at to of XX%, in of your if take result basically that margin X% and from the XX% in margin question. quarter, it I similar was gross was It's CAGR, quarter, may, decrease gross you the first very second

gross have this solve contributed higher quarter, country share don't for see As to margin. And we we mix, you of countries had particularly share different some higher of that. in which We local-to-local.

our merchant and how we grow. As to when mentioned, decides

second measures those half [indiscernible]. the of behavior the So in

Jason Kupferberg

Okay. for comments. Thank you the

Operator

you. Thank

Our with Grespan next from comes JPMorgan. Guilherme question

Your line is open.

Guilherme Grespan

hear you me? can Hello,

Sebastian Kanovich

Yes, do. we

Guilherme Grespan

Seba, you, the Two team questions for side. my presentation. the Thank Yes. and on

The Nigeria. is first related one to

from top-line. it total You interesting you mentioned some FX, think on that impact expect the (ph), gross declined not was But do impact into of the share was hear to revenues any on already we you expect to XX% and hitting it deval profit. the Nigeria XX% the [deval] I that see it

your that think in profit is gross only way can close trying So zero. I'm statements. reconcile those two margin is I The to Nigeria of to

little bonds. do in income. imagine a And want to very quarter. gross from financial country financial in the large the Argentinian is one this is operate second we was income confirm and I contribution to if I related related very margins, It the with to

you financial If we in much recap any depreciation the level new recurring per the bonds of $XX invested if bond of level the if Thanks. are this now how the those non-recurring had be in And given paying. can you're gross quarter quarter should income bonds? million meaning those gains, of

Sebastian Kanovich

question. the you very thank much Guilherme, for

therefore, the the those a worse was a market about given markets, two drag spoken we that saw on existing in and the market before has you quarters. we've Nigerian much our that doesn't how our official much, happened average that margin rates higher government in that's structure, much margin down What That why rate take and rate Actually, gap rates, Nigeria a past. QX this gap the between had called eroding. out, unified and than structure between exist broke call, is anymore. has and gross than and Nigeria the So -- rate. was it in previous We official higher the average

We which profit we key neutral track that the business any keep not level, never the zero What contributes is we internally, a payments not positive. of at our metric That's country process process to will we if profit. said variant. margin. at this dollar Every be in is gross

hard to is complexity merchants lot there and had that navigate rate there was the and now why Let why sold. made a some complexity, that of market The the gap an me in for they explain market why. FX very to understand of official rate Nigeria in it was

one, it's global and now our navigate our We punished structure. our to that expect margin easier to merchants, we a business. margin for to to country, profit be this about given before, obviously two, our from standpoint, spoke neutral but being So positive accretive gross Nigeria

probably upside free point, complement we some Maria, on Now get from feel please. it. this

Pedro Arnt

is only add average it's zero, higher the would only the than profitability that thing not I margin it's net in rates not country. Yeah, actually

Sebastian Kanovich

on it? to you question the Maria, second do your want profile, on Guilherme, financial take

Diego Cabrera Canay

is countries We Part result -- cash local sure. $X.X in of having financial that as the mentioned. markets, Brazil in Argentina, or basically million higher of like So, in of the is amounts the had you or roughly quarter higher bond. profits

markets mostly -- bearing in that those those profits -- As roughly in been use of be have the quarter. has but money of two to million covered, very see cash. net mentioned, invest like hedges fully the financial we results of you The part that you the in countries $X the We those interest to is in that positive million, and and is bond, in accounts $X that cost cost generate P&L. the process

go that company at number. cash lower interest also sequentially term, with invested, quarter, this higher back these where particularly had we the we have But amount operating level a the Over rates. of to significant situations medium a should

Guilherme Grespan

if how are a Argentinian Just bonds, I much bonds follow-up those may, paying?

Diego Cabrera Canay

of are mark-to-market on but interest the of only the is -- markets minimal company at So interest-bearing small portion mark-to-market. income bond rate rate accounts, the interest and money result would of the of operating a Most that cash income they a at because dollar out of Argentina the in Brazil, in X.X% bond. the level. financial that are quarter, of mainly The nominal linked it's the is say held is they bond. the are again, result financial the But I of

Sebastian Kanovich

down, rate complement like happened, I goes When make to things take processing goes our devaluation, of would cost the Nigeria just down. is Guilherme, a to gross our this clear. question on there's sure two but

level. this profit see you at why that's neutral being So gross a

heavily the of of between spread and same expatriation the decline are official decline will gross market in cost function market those risk. amount our the Our rate revenue will a the because as

that's clear. that's hope but sure properly see being understood. I complex, I So to it's I this you want know why make is this echoed.

Guilherme Grespan

you was sure. Yeah, for Thank clear. It the answers.

Sebastian Kanovich

Appreciate it.

Operator

Thank you.

Our with comes next question Citi. Ashwin from Shirvaikar

Your is line open.

Ashwin Shirvaikar

Hi, hear can you me?

Sebastian Kanovich

Yes.

Ashwin Shirvaikar

you reasons you're time, issue, a coming is can mentioned, as governance is local never one -- over Maybe other which the and also perhaps. bring the with growth been can scalability in what where TAM opportunity. and of scalability start of you. from congratulations I things. growth, you for the you I to few mentioned, also feel your hear technology issue has had to really Pedro the all, question you Good key expertise, like,

feel I view, you early like so that like overcome. early feel the you just investments structure. far. based longer-term that And, little made you've a that if very, on the on bit be diligence more know you done diligence So be talk impact be about based it's days, challenges did, but in need an can to the your maybe just if might to on they the margin very the need you

Pedro Arnt

Thank you. That's a fantastic question.

of is there Like as and as much fast pains DLocal growing So conceptually, important. that's first company has, all, this scaling up. in as I and any think grown are

know to evident, and to prepare what for There's that as my company being I doing feel needed that, part do. to your is like lot what and how I've agree diagnostic. I to of I a and prior done with I've to But what of challenge think the already about what done a scale. work I that's I focus arrival, any whatever and that's strengthen liked is strengthen with big is that's growing and

the company can XXx, need set this XXx, opportunity so So really that Xx, grow once we this arises. to up

bit It's early. a

am get I I kinds with think money diagnostic. I big problems. throwing of in back guys these at not you to a a better believer will

a but literally me. to diagnostic. need complete is I my still problem think solving we and day systems passion for I throw problems, two at for these This

come look is Jacob, a little tuned, build this and me might being stay with everything on Give built this. that's myself be continuing you needed. to investments time clarity think or to I simply to matter at some give if time, a there whether we'll more a back in So ramp-up a of and guys Seba, take

Ashwin Shirvaikar

appreciate that and objective perhaps in-country an discussed on balance basis, of sort between before we something pay-outs. maybe Seba, the reasonable I answer. have pay-ins achieving of truly

feel As that concerned? balance you up, your as you that you forward is do the as at look how next far countries situated five, opportunity six feel ramp should in-country you're

Pedro Arnt

is Sorry, just that challenge, that's then to the we've add, to there's so. our midterm investing this one wanted margin case, a not a the best-in-class to with is thing little relevant. the scale But I structure, do company is saying and margin, challenge guidance. that's room I'm if If reiterated and

So I it's a here. think double really positive

Sebastian Kanovich

Thank Pedro. you,

Ashwin, question on pay-outs. and pay-ins on your

products do we buy want other. we they like versus have are target what complementary, to extremely we product us not the customers that both that It's So never our but explain basis. processed selling. me pay-in us. dollar It's what from operations -- is for an one let And independently are platform We internal decide a always products that built decide at completely never payout. in being or it. our We with subsidize pay-outs. it stand-alone profit, never pay-ins every We a on our of

a over grow little newer still they a be extremely product us. time fast if than internal see do over those we'll restriction that's do the Over set for lower, a But see What for that's long of never how in In pay-ins out. significant bit words, we are an things other ramps much we sometimes can So both don't, But okay things the traction products, time, okay faster and we then we but terms out. one balance that time objective. countries never our is we other growth. will our up in product run. the if product balance perfectly pay-outs and know even in

Ashwin Shirvaikar

Understood.

Sebastian Kanovich

clear? Is that

Ashwin Shirvaikar

yeah, understood. Thanks. Yeah,

Operator

Our with from next Singh comes HSBC. question Jitender

line Singh Your is open. HSBC. with Jitender

open. is line Your

Neha Agarwala

the Hi. This I with guess is HSBC. Neha used I link. Agarwala long

revenues. which nice to like saw is quarter-on-quarter. I'd this Firstly, jump believe I at My here a this question stronger led stronger big have to Very by in to which during in welcome to is driven you revenues Pedro. volumes the related DLocal. Brazil quarter Brazil,

than that in and seen this previous if quarter So TPV that? about just was color an higher XX%, the any on average of Also, could the what quarter-on-quarter, give significantly drove quarters. growth we've is almost that you elaborate which XX% XX%,

believe of coming quarters I evolution? more so see Thank normal we normalize a the and level So sequential much. should to expect you TPV in this

Sebastian Kanovich

Good you? the Hi, Neha. How morning. for Thanks are questions.

in spoke yes, So Brazil past. our I'll grew. and is therefore, grew say our this TPV about in that What revenues the we

for sum this a just Brazilian about huge -- is previous in us go we solution it The of There's a in expecting after. a to spoke have trends massive. was quarter, in market that Brazil. quarters. testament we We those that And were great

is also different lesson think help a that business offer us constant what -- I our Those We win it geographies. how is compound in places works. (ph) be geographies and this times. should from at [XX]

win the in we platform. overall this during Mexico. quarter, in manifested was wasn't It's a solution. just that during Brazil that it it's in was Brazil of This our win. a Nigeria. the Last This Brazil in a DLocal quarter So of won testament and not fact testament a last quarter, Brazil this

with emphasize by forward. we continue our we where to rate? of business at What we Again, see macro on want track reiterated growth by more and market. geography expand that's a base How customers? how decisions land Geography make a how growth is going the make do we the make to solve I level, accommodate we sure do geography real more are basis, offering happy expect products we to for, is. we be that But this geography points? it, global because always our we are level point keeping at sure value guidance do our understood we in So better How will at what basis. pain merchant sure not our and a we that we

Neha Agarwala

And sequential regarding in TPV. the growth

Sebastian Kanovich

to results, spoke Neha, of seeing healthier continue ever. quarter, our firing this to the the in during Anecdotally, -- XX sign were continue -- the merchants. during I we we than our past very two an impact current at strong are being top all We pipeline about without in cylinders. able quarter see global business yet we very, we pipeline. this a

to come. wins. on business. that don't term, focus sequence control what our it's -- logo always growth long mid continue our see why to we happens. the growth to of the That's doing plenty great there's at But into we So Again,

a the and see emerging continue pipeline all that we best-in-class to and XX great we We generation. continue to build a great markets We sure need are across product to are. opportunity make

Neha Agarwala

Seba, so entire so DLocal you Great. much, team. and Congratulations. much, you Thank thank

Operator

you. Thank

from Jamie Our next question Equity Friedman Research. comes with

is open. line Your

Jamie Friedman

the let And, me Pedro. congratulations morning. good echo Hi,

the a is So wondering, regard worse, the Argentina, and you Pedro, in since a second early, my be that one great payments better is perspective first wondering, your a Pago, may continuum. ask but one it compliance what's the a just my one is at Mercado than for on second investors your Pedro. you was and Thank level, ask I'll in comments compliance part question. for as what appreciated company one the That's DLocal Argentina incubated this at have we at lot was of with same, this a high seen well one in I now and just Sergio, was regulatory infrastructure is the I past? about well. I very to as DLO? But is terms So scrutiny Sergio. for wondering, first of you. the question

Pedro Arnt

thanks, Hi, Thanks Neha. before also, answered you. had I and Jamie,

as one. is conversations. day to is reason markets operate what's that customers markets, that But add this obviously, the understand that's that to guys, tackle an important done again, our think And our differently. so I possible much that is So diligence much as value very complex throughout we I've we area

with the that markets joke add. of running Switzerland, press was were if generate then my the rates wouldn't of yesterday kind all we I think emerging take value and we margins, the

and in company a see as compliant. compliance and a compliance I is the compliant. be This a so team traded is to needs such, And organization publicly that US

of We processes how build. systems we infrastructure, will to continue challenges regardless and local face much

of -- hasn't across There's we'll invest and team I continue impression built value. to great great be sure stress part here functions. this that internal to built not that want our here, job by should The my our all think hasn't strengthen it's that people. been something here be out. continue a led make I and something me, out. it's and that to don't that's done. we This is been So to concerns of And we

Sergio Fogel

you in the day, -- Argentina in regulation. from changes second volatile know couple I change in will and take a the may news, there there every the have Well, in as actually extremely of is, is been situation now last almost days, the it's right question. the last

we in I big now, is and in now. this are long the the of happen evolve the the time election. have the to all going to say with wait-and-see how country in that as we -- is going the in market All We country a to a is rest for what's can believers Right term. mode see been long

We well. are market flexible. particularly very the know We

in the to applied gain have position [segment our flexibility are us advantage. market. the the to And knowledge best use market, We we of ratios] we and the and believe we unique rest that will to (ph)

Jamie Friedman

Thank both. you,

Operator

you. Thank

with Our Autonomous comes from question next Coad Research. Matt

is Your open. line

Matt Coad

investigation couple the press and just Hey, it on guys. Argentina. on release the taking going for the more a is I well. Thanks there statement, seems opening question. to Based like wanted ask your

impact then similar could hoping and on in how double-click And see could dollarization your then answer you ultimately guys over margins interested if this in just And impact business? be in do we Argentina to the term? your of Just last the Argentina, incremental that. the one you does hiring one, gave, long that kind might a how but

Diego Cabrera Canay

will I take it. Okay.

talent share we right there a XXX et if about place hiring growth payroll. we time is lot are investigation, -- is do going we decided and good know, material the FTEs until have that on before. come other shared find So more completely again, Argentina growing any will to a very our the been talent We It of you countries. where -- [six cetera. as hiring, Right we that have from you and a shared than now, over we over the and case] takes prioritized Argentina have information. the (ph) onboarding, just we is and find About the we

we If find We than good parts cheaper a mid P&L. see very world. can But are a it But it's track Again, our to In convert the workforce of don't to term, impacting it on bit the there. we long term, talent. to the increasing other the to much to you speculate happen, expect to short it in hard of that. know don't in so of easier happen, dollarization, to international cross-border would life were processing if market I course, or on to make very we it's terms would it prices. it's emerging our welcome going regarding And that. payments,

Matt Coad

higher And guidance like Super going you tax local-to-local modeling and quarter quarter had driving at like like Could this just and then the for rate bit you. that. about should XX%, helpful. quick Thank tax rate XX% one how the income financial last think a The mix provide we you forward? noted follow-up. to was I any more

Diego Cabrera Canay

tax So rates operate. have within have very profits operating again, it XX a the of five operations you the we countries company at currently countries, we the another will be the have There result know, countries in And different that mix of we as jurisdictions. in are holding different we different level.

really to So complex provide number. a is specific it

carry that -- have and did income as did having tax long As in local-to-local of tax higher trigger this rate also like particularly we a income, continue as a and we because quarter, financial profit have countries higher we countries Brazil rate those Argentina, XX-plus-percent. would

of as as we mix guide the But will country So transactions have. be situation continues, what don't the type it have by that basically we different that tax expect seen have long as outcome rate that the we eventually you and to QX. because in similar in changes again, of for

Matt Coad

Awesome. Thanks, guys.

Operator

you. Thank

Our comes with UBS. question Kaio from Prato next

Your with open. UBS. line Prato is Kaio

open. is line Your

Kaio Prato

for you quick the I Hey, Thank much hello, please. everyone. questions on my Hi, welcome, side, opportunity, Pedro. and Seba have and two very team.

view going first beyond your that given would products recent example change current like if medium in your is so, just the have to initiatives and please. helpful, us The the an about give and can is other any could term, will pursue there there strategy be any payments if change, you the following really would if forward if the you management be movements or

is I if one, from the in I'm that sure And of as the not negative you you your may, have repriced additional answers, reprice in so, this would that after you second mentioned deval not? your not if already will to if in your confirm. Thank otherwise, the like one or client understood, think That’s input, is right? peso week it. expect you And Just you. clients, I follow-up quick devaluation completely a do I any just but have you impact the another Argentina.

Sebastian Kanovich

that Kaio, take our part It's which second and the fastest. take one, let first not reprice. I'll Pedro, is it's merchants that you reprice, the the we

our such, amounts, It's their we reprice our revenues not higher therefore, increase merchants amounts we and higher indexed and are, the amounts and It's rate. own dollar repricing that to or ourselves. as services our charge fact, reprice. So they have are we our take not therefore,

Pedro Arnt

something I a So ago, Look learned first half fix that broken. that the don't we've time long at just isn't you delivered.

Our business, our business, largest revenues Brazilian grew year-on-year. doubled nearly

Our and not two at Africa look newer all. at this Argentina. the which Asia, X.X does in this a here, in are huge Nigeria I think, reason times. devaluation a for a prospects that's markets, But one-offs. strategy business, the nearly over in why opportunity, big had and a grew We change some We've need times, I'm I if long-term currencies had

Kaio Prato

beyond not any you Okay. Thank or payments could pursue opportunity no, other strategy? you. But if just wondering the if

Pedro Arnt

reach the market, this presents of opportunities The global addressable significant us. company for

our emerging need compelling. is behind to we the And execute local So in needs on and again, markets. what clear. is behalf is do their fintech vision of It's clear. The strategy reiterate incredibly global merchants

Kaio Prato

you very Seba. Thank much, Okay. Pedro and

Operator

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

Sebastian Kanovich

today. yours are remarks closing think I Pedro,

Pedro Arnt

that, Thanks Yep. Seba. for

all, of you, first So thank everyone.

excited reiterate want short on everyone Companies tend get be with a term. to do thought. how to focus start Just placing here the excessive leave they am and if to I And lost the to I final opportunity.

said of to want longer the when building over decisions. that, business results convinced periods delivering technology our where term. time. earlier, reiterate making in for so value you reemphasize I'm created everyone long and this compound is And continue that's And the we're as to kind how I is we're of we're to we that that

the us in job be super, So organization way systems. compound best time. of in to you excited of about to leaders We're why long as our see is results That's a for super to investing over find geographies, opportunity. those and period DLocal able this this product

on turn over that huge next a progress to dollar of course is. and on multi-billion to market very coming you thank over I And focus few journey years, quarters. our a everyone the attack revenue the have updating where business We look to our globally that's much. to the forward

Operator

you conclude a This participation. your for you disconnect. program, the does Thank and Everyone, may now day. great have

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