dLocal (DLO, Financial), a leading online payment processor focusing on emerging markets across Asia, Africa, and Latin America, experienced a setback with its Q4 results, wiping out its 2024 gains. Despite surpassing revenue expectations with a significant 59% increase to $188.01 million, dLocal's bottom line suffered, overshadowing its top-line growth. The company reported a 67% year-over-year earnings growth to $0.10 per share, yet it fell short of analyst predictions, marking a more considerable miss than in Q3.
The revenue surge was driven by a robust 55% rise in total payment volume (TPV) to $5.1 billion, setting a new quarterly record. Brazil and Mexico were standout performers, with revenue doubling year-over-year in Brazil and Mexico seeing a 59% revenue increase.
Several factors contributed to dLocal's earnings shortfall:
- Argentina's market faced significant challenges, including a 26% year-over-year revenue drop and a 56% sequential decrease, attributed to tighter capital controls and significant currency devaluation due to new economic measures.
- The company's net take rate decreased by 25 basis points to 1.4% in Q4, impacted by a lower share of pay-ins and cross-border volumes.
- dLocal's operational expenses (OpEx) rose to 41% of gross profits, up from 31% in Q3, as the company invested in expanding its workforce and improving systems to support growth, which may continue to affect profitability.
Despite these challenges, dLocal remains optimistic about its future, particularly in Argentina, as it navigates through hyperinflation towards dollarization. The company is confident that its technological investments will yield benefits as it scales. With a projected FY24 TPV growth of 40-50%, driven by increased wallet share from existing merchants and the digital economy's structural tailwinds, dLocal is poised for long-term success in its key markets.
dLocal's journey through short-term headwinds highlights its strong position in the fast-growing emerging markets, where economic risks are countered by significant growth opportunities.
