Business Context and Reporting Period
Company: DLocal Ltd (DLO)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: DLocal is a leading payment processing platform enabling global enterprise merchants to accept payments (pay-in) and make payments (pay-out) in emerging markets across Latin America, Africa, and Asia. The company operates as a single segment focused on payment processing, utilizing a proprietary cloud-based platform to connect merchants with over 160 local payment methods in 44 countries.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (US$) | 2024 (US$) | Change |
|---|---|---|---|
| Total Payments Volume (TPV) | 40.8 billion | 25.6 billion | +59.6% |
| Revenues | 1,093.6 million | 746.0 million | +46.6% |
| Gross Profit | 402.8 million | 294.7 million | +36.7% |
| Profit for the Year (Net Income) | 196.9 million | 120.5 million | +63.4% |
| Adjusted EBITDA | 278.1 million | 188.7 million | +47.4% |
| Adjusted EBITDA Margin | 25.4% | 25.3% | +0.1 pp |
| Profit Margin | 18.0% | 16.1% | +1.9 pp |
| Cash and Cash Equivalents | 719.9 million | 425.2 million | +69.3% |
| Adjusted Free Cash Flow | 190.7 million | 90.6 million | +110.5% |
Material Changes vs. Prior Period
- Revenue Growth: Driven primarily by a 145% Net Revenue Retention (NRR) rate from existing merchants, with new merchants contributing approximately 2% of total revenue. Growth was accelerated in verticals including remittances, SaaS, e-commerce, and ride-hailing.
- Cost of Services: Increased 53.1% to $690.8 million, primarily due to a $227.9 million rise in processing costs associated with TPV growth and increased hosting expenses.
- Operating Expenses: General and administrative expenses rose 17.3% to $118.8 million, driven by increased headcount and third-party services. Technology and development expenses increased 19.8% to $30.7 million.
- Finance Results: Finance income decreased 39.0% to $40.8 million due to lower fair value gains on Argentine treasury bonds. Finance costs decreased 44.0% to $27.9 million, aided by reduced foreign exchange losses on intra-group loans.
- Inflation Adjustment: The loss from inflation adjustments in Argentina decreased to $4.2 million (from $6.7 million in 2024) as inflation rates moderated from 118% to 32%.
- Shareholder Returns: The company paid $150 million in dividends in 2025 and cancelled all treasury shares held as of August 2025.
Guidance, Outlook, and Risks
Management Commentary & Outlook: Management expects to continue investing in profitable growth, focusing on expanding the merchant base, deepening relationships with existing enterprise clients, and broadening the product portfolio (including SmartAPMs and BNPL integrations). The company aims to maintain a disciplined approach to capital allocation, balancing growth investments with shareholder returns via dividends and share buybacks.
Recent Developments:
- Acquisition: In February 2026, DLocal exercised a call option to acquire assets and 100% of Mint Code Solutions S.A. in Cameroon to expand its African footprint.
- Share Repurchase: In March 2026, the Board authorized a new $300 million share repurchase program.
- Dividend: A cash dividend of approximately $0.1939 per share was declared in March 2026, payable in June 2026.
Key Risks and Contingencies:
- Geopolitical & Economic Instability: Significant exposure to Latin America (80% of revenue), particularly Argentina, Brazil, and Mexico. Risks include currency devaluation, exchange controls (notably in Argentina), and political instability.
- Regulatory Compliance: Complex and evolving regulatory landscapes in 40+ countries regarding payment processing, anti-money laundering (AML), and data privacy. Failure to maintain licenses could disrupt operations.
- Cybersecurity: Exposure to cyberattacks and data breaches, which could damage reputation and result in financial loss. The company does not maintain specific insurance coverage for cybersecurity risks.
- Customer Concentration: The top 10 merchants accounted for 61% of revenue in 2025. Two individual merchants accounted for over 10% of revenue each.
- Legal Proceedings: Ongoing securities class action lawsuits (Zappia/Hunt and Laurenzi) regarding IPO disclosures and foreign exchange controls. No provision has been recorded as the outcome is uncertain.
Investor Verification Checklist
- Argentina Exposure: Verify the current status of foreign exchange controls and the impact of inflation adjustments on future earnings, given Argentina represents 15% of revenue.
- Customer Concentration: Assess the stability of contracts with the top 10 merchants, which generate the majority of revenue.
- Legal Contingencies: Monitor the status of the pending securities class action lawsuits and potential settlement costs.
- Regulatory Licenses: Confirm the status of regulatory approvals in key emerging markets, particularly regarding the recent UK FCA license and ongoing applications in other jurisdictions.
- Cash Flow Quality: Review the reconciliation of Adjusted Free Cash Flow to operating cash flow to understand the impact of working capital changes (merchant funds) on liquidity.