DLO - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to the DLocal First Quarter 2024 Results Conference Call.[Operator Instructions] Please be advised today's conference may be recorded. I would now like to hand the conference over to your speakers today. Please go ahead.

Soledad Nager

Good afternoon, everyone, and thank you for joining the first quarter 2024 earnings call today.

Arnt, remarks. the section a website.On accompany has Maria prepared of today, Head have Relations.A seen in is the Investor Oldham, not Mark of Finance; you Financial Officer; provided and Development, been the the the Pedro and SVP you've of earnings Financial presentation Investor copy release, to posted call Ortiz, Corporate If Chief Executive Relations Officer; Strategic Chief slide Investor Nager, Relations Soledad This broadcast may both accessed investor.dlocal.com. being event webcast through the at and is webcast, via live website and be presentation DLocal's The based that recording available any on and DLocal's currently the this expectations presentation after mention included concluded.Before statements in event the available projections in information is will events. be assumptions, about future forward-looking or current me are proceeding, and call let mentioned shortly conference

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

Pedro Arnt

multiple e-commerce and gotten merchants in is again, we of growth set share renewal. growing years.As testament a contrasting of gains. quarter Mixed pricing of profit EBITDA. solid the indicates. will explained north as largest results and by long-term saw of multiple of one the few This success year-on-year, believe very TPV varying remittances to growth their than our competitive and a XX% We level are we with gross down nearly wallet want flat, during the growth doubling all of offer for verticals kind our position started nothing strong a drivers once year-on-year. to growth scheme XXXX up a start. off billion, to of solution declining this increasingly move us, up less Software-as-a-Service, than leading was quarterly we of posting renegotiate growth, adjusted that also compounding I to XX% north merchants size, clear-cut us our record sustained solid value while Thanks, TPV better each success We quarter delivered the year-on-year.This first and has fees everyone, over growth TPV revenue that P&L, in today. ride-hailing, new sustained for tripling a our TPV contract across XX% achieve practically joining for clear.First, tiered year with of verticals our in nearly of a us was relevant make a came The is $X.X

typically still on core Top as are seasonally that the QX. lower volumes towards weaker revenue concentration growth.Second, impacts mix has, payout pay-in monetizing shifted high such the and e-commerce a Given directly business as such renegotiation verticals product in XX advertising merchants

growth, caused the profit anticipated down planned investment rates declines were those finally, gross that and level. control have volume Additionally, important current at our ramp-ups that offset we increases should we then take above-mentioned even for that a new decided first something sustain in long-term don't delayed to by launches the few merchants, the our events.And slowed were by that support scheduled quarter

the able engines quarter seeing just flat will Q-on-Q, redundancy in well and processing new compliance got XX% robust TPV better we The growth merchant-specific rebound to a what being offer features growth remains to effects, seasonal growth weak a the is a as it as cross-border of and above OpEx eventually superior despite take quarter. the success concerns is at confirms record smart local prop through remittance quarter-on-quarter they best-in-class success.Trend-wise, of while local a among It the see conversion indicator.Local-to-local This, to we and routes prevention as that also again, me higher you offers, deliver made core execution QX. GP efficient $XX that layer and by, Mark first global March With paying profit, $XX our gross is where traffic product these came our mechanisms returned detail long-term our fallback of and growth QX for the sequential offering some million, in meet to transactions a prod and nearly the slowdown to global world-class to business, businesses we've through but service business. gross $X.X year-on-year. other levels. and that our year our quarter, offering, handsomely. let adapting processing direct return in first building, existed fourth incorporate hit and during TPV positive our details dispels partners and otherwise at X% an spend rates, they driven merchants infrastructure about after value one things, is by greater profit walked merchants totaling our will declining X through you continued investments marketplace witnessing AI-powered in in the can temporary capability of on billion integrations Argentina, second, structural against acquirers.The which could our the delivered priorities.Our months progressed. time investments optimize our off driven needs in very the that to orchestrating cross-border the receive KYC routing our pursue technology Maria in of update of last million as confidence internal the and have We in strategic in on Cross-border providing performance a QX

in opportunities us, XX% QX pay-ins ramp-up liquidity itself as that addition grew our our pricing it offering strong represents in a cross-border, during corridors driven local, offer for merchants.In evolve pay-ins investments over and banking for remittance Dominican partners. granted This an can to our quarterly and Republic up interesting our our as of operator such our generates capabilities, maintained corridors strategic product a and deepening license offer Ecuador, operations partners global efficient by and also across in including we portfolio, business businesses, number effectiveness.During licenses payout our Egypt The in ramping and can Argentina, the the Q-on-Q is and in we our year-on-year. by to XX% Kenya. also our we new growing market disciplined particularly not QX, and Our interesting but payment were relationships to continuing that improves it we growth in making registrations quarter, and vertical back-office commitment cross-border with key only and pickup growing payouts,

believe in to to you results. Maria advantage let portfolio navigate approvals our overview regulatory detailed markets.With emerging me continue the increasing first of an complex We growing more hand will competitive global merchants environments take quarter through constitute these to it regulatory to of a that, seek as our over

Maria Oldham

Thank you, everyone. Good Pedro. afternoon,

Record XX% on and revenue. strong of $X.X vertical, in during QX mentioned, seasonally despite for TPV most quarter, Argentina.Focusing TPV billion. weak being As we and devaluations, notably was growth this e-commerce Pedro year-over-year quarter-over-quarter, X% achieved first our strong delivered just reaching largest

XX% we During reaching Mexico, strong in million. streaming, markets; is year-over-year by increase in most ride-hailing growth revenues in driven Other growth coming growth year-over-year.Alongside Mexico XX% Colombia, verticals. on-demand the from SaaS, performance saw delivery the and comparison Argentina, experienced LatAm, down year-over-year Dominican and up tough was Revenue our year-over-year one. $XXX Brazil and impacted growth, in Rica, growth Costa a Argentina Brazil Ecuador, XX% annual This quarter, including competitive negatively and was we year-over-year.The with XX% XX% Republic continued up by

than XX%. all, the First devaluated official has rate of more

revenues mix, higher FX have combined tightened, in a FX Second, generating local-to-local with volume. our less of proportion spreads

growth on also revenue is our Argentina a instability that during merchants merchant, our at affecting of and up were with Africa churn the rates between XX% volume that as service official main partners saw general XX%, significantly their by; FX expansion flows we on not given spreads of year-on-year that the we financial position combination pulled lost decline to TPV, revenue large into business the that negatively and due the customer contributors the X driven Egypt, down that a driven also market, e-commerce in that solid a drag revenues.In of back service decline market have months.Chile key merchants. pay-out from and our was Finally, the Africa, saw XX there pay-ins and given of but market. strong was growth, quarter.South growth given many last growth client wide our and South a Egypt of they Philippines. liquidity macro of TPV was over lost year-over-year, This financial Asia, Turkey in the a Chile that by for rates one had a primarily major that one Africa in revenue cross-border our have our market, merchants our of market, the

merchants these XXXX. of grew significantly One during volume

of vertical. and Naira rates drivers evolution driven give the largest Africa in merchant with of volumes a less in XXXX, local decreased sequential first that XXXX, merchant quarter-over-quarter the at X%. the to becoming e-commerce let the the onboarded one in was other brief of in XXXX started The second in being processing very QX, end fees we our rapidly over devaluation is South of down higher Nigeria, biggest of key a volumes generating QX quarter and the XXXX.Now overview by February FX of tightening region.And revenue for million spreads XXXX, market QX me growth quarter official the their by; was mostly finally, the This seasonality, year, and local drag of you decline were year-on-year strong a driven last on after to the revenues. where mostly Compared by revenues revenues between $XX proportion

pricing also one a a we the concentration revenues, new tiered still Additionally, that and saw in came factors merchant renegotiated Brazil mentioned, decrease and These achieve scheme to their largely in contract our respectively. X% up a growth. high, and level such X directly as given XX% Mexico our Pedro impacts renegotiation fees our explain largest remains of revenue renewal.As merchants

were the gross volumes e-commerce compared Brazil, higher volumes our volumes.The In from in a revenues e-commerce explained payout saw Chile by service vertical, seasonality. due some to cross-border were addition, XX% Argentina, Mexico Those driven and in from lower of mainly higher in by lower merchants with settlement. compensated flows, albeit we to revenues financial by volumes lower at quarter-over-quarter, rate in partially up offset by decrease take Chile, revenues

X%, by As Asia. we LatAm reacceleration Peru.Revenues volumes increasing to Africa also increased improves. gradually grow in on-demand driven believe and that ride-hailing quarter-on-quarter of a X% continue indicated and in will verticals by Other quarter-over-quarter merchants we the growth America liquidity in the last in revenue and helped cross-border quarter, delivery as growth, Central

earlier, mentioned and more year-on-year first revenues spread of in doubled Egypt X than the in the the quarter-over-quarter, year. in official driven rates market months exchange the commentary, by between the As widening

quarter-over-quarter also African the same devaluation, with offsetting Africa, growth Asia XX% down Indonesia, in sequentially, We large the described and those playing strongly as year-over-year.Revenues experienced solid in dynamics of Philippines, in other a by Turkey Nigeria the the gains were out part markets. the South affected

on financial by were in after our the with as XX% the our vertical to platforms.Now devaluation less to addition In moving saw devaluation, occurring volume drop a gross material sequential merchant's in TPV impacted negatively FX revenues profit. decline trades service

on As Slides profit I we in walk profit variation experienced. from have you X from you through included some earnings by we and quarter, material like breakdown this the see gross Therefore, accompanying would in detail to region. the gross greater can X

with profit the X% quarter, XX% to decreasing X% down significantly year-over-year. In year-over-year gross result million, gross LatAm, was growth by experienced impacted Argentina, year-over-year.This was we $XX During profit million. $XX

XXXX, from contraction Given in FX and the in gross their profit; Argentina, to share as QX, margin the XX% year corresponded of benefited revenue, Argentina explains with past, These, from wide XX% a XX% in our X%. gross profit QX, the in cross-border XXXX.In of to we the lower spreads. QX, ago together in FX XXXX, lower volumes

up LatAm, by, local.Chile driven of Argentina, Brazil year-over-year, percentage year-on-year profit Africa Egypt, profit with churn at Xx, in Argentina, and year-over-year.Gross by year-over-year, to driven driven by; cross-border. our In year-over-year, from local supported earlier.On was observed gross Tier Similarly of the in renegotiation. LatAm of to merchants XX% we profit having Excluding by of gross by comparison, in explained region, merchant liquidity and strong country. a gross only We volumes to Brazil growth of This up quarter-over-quarter XX% America, points share lower Latin performance explained gross primarily Egypt by and first, financial platform, and gross we gross as slightly strong XX% Pedro, profit with key up growth saw XX% by contracted by flows year-over-year, offset to benefited accelerated profit compared and year-on-year gross In X margin the other Nigeria in in Mexico margin in our X driven driven service profit Asia Other pay-in by growth border the at driven in competitive more wide pay-in profit merchants was markets, grew The at profit recent liquidity by spreads driven cross gross contracted profit of in in XX% up in earlier. X customer growth payouts. renegotiation mentioned profit growth.Looking cross-border merchants, contraction lower mainly growth our to X%, Brazil developed one grew and due higher discussed pay-outs cross-border most Tier contracted fell by Egypt, Egypt Chile. as XX%. position, our due previously to merchant's gross our performance mainly payouts partially

vertical. lower driving take this net rate seasonality e-commerce volumes Second, higher in

follow quarter-over-quarter, payout Other gross gained growing Nigeria with although in in pricing results sustainability, declined observed Egypt decrease improvements we is in XX% by revenue Argentina, with in increased in the of greater the we LatAm, with the basis, Third, Chile. and Nigeria in growing profit Mexico, and gross we comparison. million.Although revenues mix.In by scale XX% cost Argentina disappointing, a negotiation gross variations In do while we profit we structural as Africa, quality line are On gross the gross volume over Mexico, year-over-year hand quarter-over-quarter acknowledge the we saw having grew dynamics to were revenues. quarter-over-quarter. with $X and revenues the million, These variations by and compensated let repricing, impacted profit vis-a-vis same with our negotiations dropped over fallen by offset in X%, our structure these we increased P&L. Quarter-over-quarter, with power merchants.Now, In merchant of year-over-year saw negative driven processors.In Egypt and profit decrease, XX% QX partially have Argentina working LatAm. FX see issue. gross in significantly. time, growing an down addition, Asia gross that line we Other profit the profit but global $X been not believe by a continue from profit quarterly mix we Mark, And will me way these to

Mark Ortiz

to month excited be future and Thank very everyone. prospects my Hi, Maria. you, delighted initial here after I'm DLocal. about today our at

more ways building establishing capabilities, While long-term we his invest in to also our as to business.During continue team, for capabilities are be out looking areas of in have continued our and our the Pedro further we we remarks, across to ambitions. efficient growth in quarter, the invest support processes and opening systems to will mentioned all

operations, infrastructure As which expenses; licenses expense were: the a for reached main including of pay teams. quarter. off and will tech-related software result areas our trust overall The and operating we compliance quarter-on-quarter of across engineers, finance $XX mid-term, these salaries in expenses, million wages investments, increases the expenses and and

a operating earnings the detailed XX% gross accompanying As view, Slide material. of please expenses refer to XX a result, represented profit.For more of

the operations with of an in the add that the grown and Argentina, this with sales XX XX% Uruguay, Similarly, FTEs XX% operating X XXX same percentage increased just ratio year-on-year of the of profit EBITDA this lines, in the earlier Along XX%, $XX I was the year-on-year gross and in down was of also profit resulted XX% by of for came net quarter, million, at EBITDA was other million profit and which quarter, impacted $XX in to global million the tech, and a team the for detail evolution gross of most adding by has and hires Spain.All Brazil XX% XX% operating XX% provides XX% EBITDA during earnings by margin adjusted net was quarter-on-quarter. quarter.Net income, adjusted points lower decreasing presentation down Let quarter-on-quarter, quarter, our for income to compression $XX The quarter-on-quarter.Approximately after and me discussed people of down the driven expenses half mentioned. year-on-year the quarter-on-quarter. adjusted mostly of EBITDA. quarter-on-quarter half decrease

our on income towards to quarter result rate shifting entities.Moving last as in effective increased mix the cash XX% addition, higher revenues of In XX% flow. from a tax to tax

be the solid framework our current limit.Our reaching purchase May the investments. we with quarter. million cash cash up shares. cash income for cash to This $XXX on net million above $XXX at buyback upon repurchase buyback million free of $XXX million, XXXX Having of flow A conversion months.We expire quarter, that, conversion. $XX strong for Considering that, to the The XX% income last plan of said the has conversion short-term quarter authorized common free general million will the of our corporate million flow reflects to the cash came the And the generate available generated business $XXX at the to capital program flow. $XXX including free or margins to strong of During liquidity and our stands. cash purposes share robust earliest continues Board allocation in to ended continues position a XXX% Class program with and looking where share when position, XX net

towards sheet represents to arise, the P&L.On our forward, term have the an This given compression the improving take we very added and DLocal as enormous it can our to under-leveraged an approach, already teams. into capital finally, going in short of systems opportunity. consideration are that continue as program be seen company opportunities It cash, that element in development deploy buyback confident but we executes taking is we in margin of portion will attractive the few should a capital mentioned have corporate times, by balance input, complement trajectory still generation we have overtime cash internal cash its is disciplined use a allocating we to to framework. an capabilities our are strengthening against strong should We a reserves.And the allocation this believe attractive

program and in prospects to out Pedro the carry generate business strategic ability our it confidence to for our buyback me this our underpins hand to ambitious of So, this, let continue going future over remarks. closing to forward our sufficient cash back plan.With

Pedro Arnt

Thanks, working in today. you here. let to altogether rest together enjoyed you of past the wrap call way, Montevideo the up By Mark. have I'm and I've leadership pleased the the few over on team weeks.Now, the us me with

towards At to performance with variables variables the That's greater guidance conditions, coming and to with this always plan these that although shared of affected versus this the on emerging we regulatory de-risk lower the issued reality as they be we best with current markets it the timing actual guidance a mind, delivering but focused of our aligned at that the few also are are time much year. but that are still simply knowledge, level and possible, we mainly that Our data, these the own as of on such and on that XXXX changes, objectives, will merchant go-live name unpredictability of just working expectations of in signed in toward and on. the will FX characteristic manage of the few.We is a end hinge the point is as ranges. rates, of we macroeconomic by hold contracts our on execution, likelihood in our tracking context believe we business.So, beginning exogenous

payments unrivaled by with to earlier compound aside, the capital our represent very potential to new XXXX Our incredibly market friction allocation in general and we the and outline of Mark's positive highly you digital our remain improve long-term. a the for of opportunity major the repurchase and an confidence progress opportunity on Thank remain businesses and program mandate is Emerging on and point. that.Short-term have markets to remainder of its land bigger testament our over announcement encouraged for the much. of like to both still profitable we're on picture the growth our that, we'd a business.And summarized framework share take now your is company questions. volatility

Operator

is Jorge question line the [Operator come Morgan with Instructions] Kuri first going Stanley. from Our to of

Jorge Kuri

Hi, XX% of Pedro shooting said EBITDA the profit XX%. Stanley. from ask to Kuri But and low XX% gross year, your I hear guidance Morgan is for still did guidance, this which maybe quarter the hopefully end to margin, Wanted Jorge was about for what about to and not. that the

quarters? that the think that couple So will If through, Is that that can one bridge us of to close from you I gap, how a gross you could anything profit can do are us margin of going think here. and how to help clearly see you to produce things XX% very next you there maybe be useful progress get of that XX%? we from is understand is quarter to out gap that walk you clean this more non-recurrent what reflective in

Pedro Arnt

Jorge. Thanks,

thinking how we're on So, X through the model. financial things

this structure in The we where it to profit need is that did from a cost we'd behind is obviously like one, to acceleration a first The focus be. top that we're perspective, because line gross where came on.

in are gap perspective.The need be second and is most potentially on gross we pipeline gross have we impact what that say this of from we we that term. was with it's is taking when is to so a thing third profit, make would the able a balance of I and have to spend.The structure long cost most within is that, so our the and where existing we relationship margin, because or between So, we top to that closing given account terms revenue always obviously, short we profit line-driven of we come costs, have, make we range and lever we review part we the objectives is part, consideration the that of important to conversion adjust sure long-term ambition guidance the with the into equilibrium contraction short-term sure do that as the

Jorge Kuri

profit If rate quarter, for of just one year XX gross expansion How X.XX% of items I The as of may, the down points should take maybe normalize? an you some rest basis on the the that. quarter-on-quarter. these does that mentioned look

Pedro Arnt

a across that we've Look, series our like very markets, business are XX said, of moving is parts volatile. multiple markets merchants and

our which QX bit So, see focus answering little is we've we reported at by to of standing on gross there's just going you and driven given that, which quarter trying rate of your a to guidance. question, important quarter And We've the general, vertical. first also take guidance. vertical, reiterate given is guidance.In I'm an we'd answer a how you think a part continuously seasonality. for trying margin but quarter. higher questions the more to the quarter, our we're a to the and refer get exercise look to is on for driven When where we I the vertical the e-commerce pay-in got of compression typically drivers than rather the that weaker

the pay-outs in either that global case especially in fall. you the and of So, take a to end e-commerce rate between saw decline increase a towards gets multiple rather QX build take really isn't structural and mix that's think questions, again, we but drivers the I issue, other this get QX.Ideally, we necessarily the see of payouts tilt back one towards how play vertical the not necessarily that greater is which the and from perspective, believe that saw as isolated pay-ins detail the into need into that progresses we very year, but outlined, But, then extrapolated renegotiation helps all something QX. for and we to the relationships.So something variables can in can we've continuing merchant year we other to going a large to let From rates. out direction

Operator

Our next with line of comes Labarta question Tito Sachs. from the Goldman

Daer Labarta

diversify and taking call to even that the bit question, still feel the that of growth ask guidance, of And gross and dependent can but as you end have of you in always to a you second merchants, of I mean, guidance to to better of maybe outlook particular, you somewhat for although that sort given But you good the to then be was well. to the perhaps size get mentioned profit that you from merchants, question, the them ask And off of low February, longer-term guidance.Just comfortable guidance? on to or to for I able can of you also, grow Because lower going the pent-up of mean, March a little those mentioned $XX that? sort about Pedro, either I'll deliver of after. particularly grow that deliver anything there, I is as the a sort expect? demand that growth the Or away one, million. of? you large have any think from in sort guess, can base benefited going is are you with I Thank just, January concentration and I have March that and there was end just sort March to how be a you base think this you my to understand big

Pedro Arnt

Great.

continue onboard continues more let and time, business and questions. to the backwards we that we So, more to your diversification, as expect as grow fall. that On sustained work over from we've merchants me diversification to

XX scale out the as business. less merchants on So we dependent we should Top be

concentration to and base Q-on-Q of continue overtime. If onboard think diversified The bit to a sequentially, actually ample large somewhat.So, is you to an I have merchants hundreds do increasingly look that. we us for clients little opportunity saw enterprise Top in of XX there's down

we're the happen they extrapolate I March, right what merchants puts success, that recent has in takes. explain some what's those as throughout can remaining actually now.March, try we've seeing think is emerging global of retaining in markets, we quarters very, large and Again, what wallet very and months generated expand the relationships going of year. accompanying concentration to seen that's of very strong the to happened the I level of not different X think, and over share

built March then end is have the was how a that of into indication QX, in out.March, continue we process for year I and is opportunity growing our in think, our of best the we pipeline terms throughout adjusting of each bottoms Egypt, through guidance towards trend reflection getting a up quarter, merchant still of where detailed the we TPV a flip the for share quarter was profit of on momentum and gross growth was flowing after giving you Our some probability that direction.On of decrease. and calculation better positive merchants, devaluation of TPV from for the begins we full occurrence very we and which the which of business analysis right guys think plays had side, wallet the positive QX, that That sustained the to a to quarter. in

a out Then and we platform, different of and of adoption momentum the puts that here, number. metric underlying QX. how in total good so, how need And core into to to QX see up our everything takes adds plays again, geographies merchant of terms TPV,

Daer Labarta

been question there there there, was but Okay, were quite other bit, devaluation see up we negatively currency that's a a I -- it some to particularly that, and when Egypt revenues just was big very has revenue. typically, tends in -- helpful. the the impact year-over-year, And had

compare be And understand FX in to And just specifically depreciation gross further if headwind in there's like Egypt the margin what So maybe like, markets? to Egypt? in this does how happened other a could Egypt?

Pedro Arnt

Yes.

you've limited FX that emerge time again, time with markets as controls. in or emerging markets, throughout capital are these and So, seen either opportunities liquidity have

is see and what of And HX these so in if in is one began in profit and need heading opportunities remainder we XXXX, was we out Argentina is in we're the or devalued, our Argentina the of Egypt business into HX QX QX merchants spreads but Egypt FX offer compress to point. its we're those emerged.Now seeing useful have not. emerges those that tightened, unique for the extremely and of them, currency and spreads. to to able what points of widening year, another has case time spreads, from XXXX,

Egypt FX devaluation, and for consequence wide case rates margins yes, with a those a of So, margins the higher tighten as of QX. take spreads, was and

And it's we so an volume a Q-on-Q diversified, with becomes the line don't our always but business Egyptian offset headwind advantage that think the markets.I remaining need and wins is to trend, up fairly business things across there and always when one. we these where kinds opportunities Over lose our way our across at immediately, a another you market footprint. get time, up are the in you that markets popping of when look one

Operator

next line with comes the from of BofA. Our Jason Kupferberg question

Melissa Byun

just Jason. question. had for a This on Melissa is I

like in you So the said, the profit. quarter, in gross decrease

and your of go respect of achieving end to meet will large renewals ability delays new your you other live? was the a to like Top coming sort of lower factors the or contract for merchants those do kind there of have in One up that visibility see, merchant with renegotiating pricing the a significant Do the guidance? tier with of fees. might XX any And gross you launches, when some profit are impact

Pedro Arnt

great Melissa. Thanks, Two questions.

this looking volume the the of reflection is merchant price of still more at the a potentially look where even markets give retain in Street very, them.You okay? the periods context the have been in what do thing quality is as will it of we should able I when happen a think so best for attaining point, dynamics that them competitive that right thresholds merchants they're I and an very merchant on alongside that structural renegotiated. is the this, found relationships me relationships been are than trust trying other market make they're little merchant news. It offer indication and we're of we market had I'm of simply of or I what kind have significant here at of the process to relationships other pricing what enormous see do pricing both continue And prices, also to merchants. in of merchants, to taking say the into merchant and much think that look merchants attained tiering alternatives and these rate we Brazil. large to we it's actually merchant, visibility question, time continue of growth a this that's is continue they their we're important other in global what way we're because this with out don't right? dynamics, the large they've And able we able any of point a is So, but higher happen. justify longer that this now natural look that we've this of markets, look will when a having that the discounts contract that large we've think but they footprints, a renegotiation could was was...? we at global first I volume if should let for platform change The when contracts.I commanding, global we're back, the talking So, volume to the means their which emerging kind renegotiated to and is the argue, don't to other expanding as grow happen new That's grow us.So, Potentially, in markets, markets, our clear also understanding, on of justify that us. And And more bit our So, to impact them.So over higher would to at that's one to similar the trying the this offer and that of give a consequence with the impact that could of very compounded most merchant, long-term is the rather be services think a about we to second that have them renegotiation happened volumes we manage sure with those we other the here making through that a consequence view. sense through us. particular not yet good very the and that as actually, a point

Melissa Byun

the some delays the on Just launches. with of

Pedro Arnt

Yes, Yes. yes, yes.

gone second quarter. the these some in already So, live have of

go are like we'd clients them of very be that very long-term, live Some QX. potential large, to able high to

longer-term already cases, think when quarter of these the logos in working up So, of they ramping I when some give very, these Others, on impact second start logos Eventually, I'd live are we've announce pursuing to that the promising, and and are you say a for terms might we time. potentially, we still be incredibly go QX second are long-term, in impact attractive in perspective, quarter. we'll some be live. quite hopefully, able that But or been very they some muted. updates

Operator

come from of question Group. Susquehanna Jamie [Operator with Next International Instructions] Friedman line does the

James Friedman

I I everybody gross want But it profit incremental especially by it's region, is share something, how you to Maria, you when more. about wants mention, the appreciate helpful. the disclosures, know

pay-in those, indicative? those the natural So there contemplate characteristics of even wondering, because margin the is X, verticals, are can't which of I to say might and attributes the was be the if any characteristics way margin of Slide that pay-out you

Pedro Arnt

a larger take they come The pay-ins, take margin as terms, But that's usage being of quarters, netting rate rates. in at lower impact pay-ins in business. the of liquidity on business, it's they but us general gets than profitability in the So, where a the the most pay-ins pay-ins at Jamie, higher able permitted, FX is spreads the offer when payout markets in liquidity repatriate slightly actually noted, is pay-out reflected. to where business because business terms

point again, helpful, think So been consider take so too a here. disclosing And in that's if then strong terms haven't we interplay to these. both of we'll that, there's much note. between of We'll take rates per not vertical, comment it. we And some at

James Friedman

if you talked have onboarding follow-up, of I Okay. may call stronger which versus your of the about out prepared growth can more remarks, the could in March? a of that Apart from Egypt, January, February. function strength is Pedro, And seen Or relative in then merchants? new just you regions the March

Pedro Arnt

total mentioned, volume. I payment Like

what and be into continued that's you gradually So, our stronger general gives again, month growth indication quarter. of to processing that terms in was for the we're each second of year, case company-wide the a of the merchants

think So, for growth Egypt launching us the continues But, Obviously, is and trajectory. through general, TPV that, it's sequential countries one because the the we're in incremental comment merchant and a month-on-month the trend May terms highlight can't that does business merchants right isn't businesses there. in important of in April. second has for finished quarter.But that in in we part yet, the change I been so processing of we're to general, of volume that in

Operator

Our line from HSBC. with the Agarwala question comes next of Neha

Neha Agarwala

a local Because that TPV between share local one to local of higher cross-border be you the share Quick with share local. bit please explain the a actually local. stronger. Could Argentina, on to cross-border of went saw would We imagine to that? down local I and would and was there

you're go you any on please specific extra for explains a Is robust it Any elaborate secondly, more side, depth more or in the spending it developing geos? be the spending on? is you making shift?And are first So could anything because exactly are platform the did helpful. the platform more the would more color where tech on bit expense you that What the quarter? in

Maria Oldham

Neha. Hi,

take you first cross-border I'll So that mentioned. the on volume the one

remarks, Pedro the the On success mentioning business. you prepared the may of remember remittance

business. and So we have that corridors been growing growing

the So especially this growing the volumes, helped has within us cross-border payouts.

Mark Ortiz

Mark On expense is side, the this here.

on In to for we continue have us. and that investments the products further that investments help here continue and of make side that create we're expenses, will to the the accelerate business and launches done that terms to focused we've we the really technologies, us technology sure the have

Neha Agarwala

any specific Difficulty]. [Technical And

Operator

from Coffey come to going line is John question with next of the Barclays. Our

John Coffey

to in One increase QX that back you your public, revenue when that you'll see revenues. that is thing QX, I cadence from go the at looked sequential for to normally you've been years there's

I M&A any Pedro, quarter's considering that was call, we to on have?And was that those think which had and now this of if in of of going penetrated a tie last I should is in little this that potential wondering you see so verticals, -- thoughts follow-up I think updated the that you essentially And e-commerce have you're other DLocal's that. Is as now mentioned more conform seasonality more my bit revenue some you're verticals the broadly. retail might more kinds normally to just cadence sequential to to decrease. start

Pedro Arnt

Sure.

your on you're spot smaller we're businesses One and seasonal cadence higher. rates growth the are the grow is X off So, you're basis a things in think, Q-on-Q happen, lot as typical a growing. of present because and numbers, way terms growing of, smaller as I absolute at isn't

e-commerce actually at year-on-year grew look More importantly, vertical year-on-year. the if you give case, volume Xx our that in we e-commerce growth, disclosure, and

other QX certain platform So, e-commerce to more QX strong seasonal plays advertising, seasonal very the is today has which also I'd to nearly movements our it, by from say clearly, not that from a a as in but e-commerce, cadence as seasonality merchants one with is role QX. penetrated much QX. to the relevant

John Coffey

on M&A, thoughts? your And the

Pedro Arnt

that where that accelerate or acquisitions if where that making a there see are are us it's concerted scan report I make sure or landscape, the are can we're to there but do the we to a could opportunities the don't we're not to things have then I would sure, That's growth anything at. Look, actually reasons, we there M&A effort not, want significant making best on And we still and or to to on consequence if potential in dropped comment, talk of the were it it, those do M&A, to think report, and isn't, makes not. sense we're laps fintech our for us obvious fragmentation or but having diligently understanding we we where space is decide given is we whether help understand talking working. really we there not.So, working

Operator

Coad comes with Research. Matt line Autonomous Our of question from the next

Matthew Coad

your merchant kind a very merchants. I with would the Pedro, color the business I just large would provide large some if is renegotiation. rate naturally Curious type of merchants. could pricing with this to back not successful of why occur go other wanted doing take of these think you to lower price on negotiation

there that really be color could any would provide So, you helpful.

Pedro Arnt

with agree you. I

of I such across you say the time. the the to remaining we're the trying of is merchant period is, generated that renegotiation short shouldn't that within merchant scale think what base that extrapolate a simply

our where sit this be more why that's it to me that so volume note, that with replicate way, so were those we down -- large imply of say a pace. or think a absolute a different to have kind merchants growing negotiation business at the merchants on is we, And let I positive able of actually, to to significant would is

of These that So, is piece a of be there's bps Remember look this also presentation, certain the round at and this profit is in important and Brazil, happens, on pricing very, rate become large.If think color, over this in tendency, that X of of could but isolate the of pricing this. bps compression of isolating about take the renegotiations just that time, impact terms XXX what when there's benefit that you has tiering which when just the basis. to we've do disclosure of you I other the new that you'll see this given we're giving yes, of impact on the pricing only have compression focusing the about is you in not very think smoothen merchants situation. to a And I now I they merchants we the it's say incremental terms solely very that to consolidated business natural gross to the guys on be good situation relationship, a because when ] us [ quantify actually you winning merchants means large. pretty there it.So, it been so open global change is. geos explains able try our so well so also weight Brazil is the undue enough to tendency that again, get And would it a placed set and to in, to continue can it's markets, accompany things those an what other with up opportunities finally, disclosure merchants. impact they the we've

Matthew Coad

your term, enabling you of that? I just grows, unit prepared touched question, like like your kind of that's payout the what the during you kind just broadly of a other volume like of netting kind to And netted kind business remarks of of potential and on kind of your to guys like, like business opportunity briefly longer growth of economics touch that speak as result on improve wanted My percentage is just that. your as the of Could then netting?

Pedro Arnt

just we Sorry, numbers to there. sure trying have the make right

Okay, business a you've offer financial for verticals Remember, the we infrastructure business to as users. for newer seen, end remittance service or remittances consumers. remittance We're so provider that touch don't us. of is end a merchants

successful. fast extremely it's growing, So very

TPV our through of that to but have being about currently the repatriations leads there, netting. terms In size, of absolute X% done you

do We allows relationships we at can competitive improve is and that allowed being where brokers. gross you the the So margin relevant very netting the makes can the spreads.If FX In the amount allows market, time. because market to have FX markets where still extremely Egypt seen it's grow, we've can exotic the on also or traded, us corridors an that don't go case small.What is are X%, of in then very the not for over so Again, net. profit. not gives is big. impact regulatorily through currencies it's markets that the FX, competitive to FX because or those, fast over significant the that it's lot is growing be netting terms those of a case. sporadically if do gross with could banking still It we us, more of the simply and us terms win rates competitive very Argentina in time incremental it netting in our global it us improves business we more to and

Operator

Our last line UBS. going to the of from come is with question Kaio Prato

Kaio Penso Da Prato

please. my on quick, questions side really Two

this First is the quarter. the related results on to devaluation the of effect

quarter salaries, massive sequential XX% fourth Q-on-Q. G&A get second, see in would gross again, of and in terms us?And G&A especially especially which with to continue expenses, a with of if almost in and the increase, in would about margin we saw we like the you we to profit estimate what a saw to profit Just increase that this already quarter, share of gross have the saw, we a major without deval and again sense any level be Nigeria,

if related Just this is double because click we and that was this the all can here what net to headcount following expect for quarters? like to seeing would quarter, new the high that addition not

Pedro Arnt

second will take So, Mark let me take the first one, the one.

the doesn't gross that in profit that in lot have is gross saw all, we activity relevant The for accounting revenue devaluation perspective from it us. profit has they market that an a leaned impact it less of Nigeria that way of flows is because less. a first the our market So, in that impact the after from Nigeria, that as into merchants into devaluation that

also a clients that could It's mix direct actually to in just devaluation were service than after they gross higher financial impact have less business. Nigeria. constant that We a active prior devaluation.So it's the you of accounting Nigeria were the being we for a give less currency profit not

full devalued peso Argentina effect saw the the from for a deval QX quantified gross and occurred few in quarter, the haven't but So weeks, we that. Argentina, profit then you perspective, first saw rebound. a we really notwithstanding

quarter. Argentine devaluation in quantification was said, the is if second business impact us the the on the any Egypt, quarter, cross-border we on business haven't to lower even there So that the but have disclosed would looked level, in better, offset enough anything, that. the as I at primarily first TPV hit to didn't level.And going increase so currency constant currency in much the lower

assume a specifically or within as when refer OpEx you're G&A, OpEx. asking us Just to you G&A whole I

Mark Ortiz

Specifically G&A.

Okay.

of side, things G&A the going On there's there. couple on a

we're investing course, of First, in people.

remarks, the up has So on our by headcount, about people. as prepared we gone showed XX

whole But the of in inflation in of there mentioned last have -- course, that, Pedro of the end So year. devaluation the we increases of is an at impact Argentina. impact of some also, the

numbers were bit the in the whole fourth than this a So the and lower inflation.So, increase devaluation somewhat quarter, related looks to inflated.

have that, closer a not were bit numbers the would each to other. be you to If

course, the -- So about the we've the it's increased talked things there. a impact of that And you've of that going investment on did. headcount we But inflation, of that got, again, got then deflation. you've there's in couple mostly,

Kaio Penso Da Prato

Okay.

So, that of assume because for this we right, this assumption? like point a devaluation at upcoming a point should the all quarters, of [ fair starting we it effects ]?Is saw is the

Mark Ortiz

constantly I is where as in review we profit cost said think our coming structure of our light in. before, I gross

constantly not through the one-offs So, But for be costs all said, directional, anything, and calculate.But, quarter. again, and certain things reviewing to G&A long-term were we change then the point and a valid being in P&L. this I equal, think to we in general also short-term a balancing there as like are how we we're are starting would that you flowing

there's decide change that certain So we in and the to back any prospects long-term hurt that our we always it possibility significant areas cadence won't way. think cut where in

Operator

you. And any closing back would I conference the further or hand Thank to for the company over like to remarks.

Pedro Arnt

the duties we've here, for operator Okay, so operator the think I'll second. lost I do a

and there growing, business winning one and Q&A is growth of the set diversified, expect some across the growing a that one over drop, to never are periods gross short the our all today. that's not. model products that strengths are time it's countries very we periods has grown last run, we at well.So as storm like that of that and that the thoughts of products. reasons as look long some are we this consistently should is grow.However, I'd market anything, is we whole don't been that one distributed the we think QX the coincide before streams, have, multiple we're And business it's see in up others geographies see And say. some and and diversification think our grow per If geos where quarters, wraps over decelerating that. giving products, that Thanks had change. products of activity we aspects are we across think questions.Just of geographies where simultaneously of or you we as few on we typically key revenue perfect of grow for a for I part. we evenly the When what our has metrics, across not But profit portion

focus happened fully over break so, around [ you is this equipped deliver that firmly we run.And longer-term let's year subsequently it And in profit generation, to not when cash clearly to although EBITDA. we came business the a we're very that committed signal the on from very the occur, fee long-term well to growth and top turning that that of progresses. grow and these gross believe hiccups to and committed so, perspective, remainder is still our We're and convinced do lose updates growth, a profit over but gross capacity disappointing, EBITDA trends growth and are TPV give ], on long still as hope line firmly what of to a a the Thank the quarter you in not guys much. year doesn't

Operator

you conference today's participating. Thank for call. concludes This

You now disconnect. may

DLocal Limited (DLO) 14 May 242024 Q1 Earnings call transcript