First Quarter 2024US$5.3 billion Total Payment Volume, up 49% year-over-year and 4% quarter-over-quarterRevenue of US$184 million, up 34% year-over-year and down -2% quarter-over-quarter129% Net Revenue Retention RateGross Profit of US$63 million, up 2% year-over-year and down -10% quarter-over-quarterAdjusted EBITDA of US$37 million, down -19% year-over-year and -25% quarter-over-quarter dLocal reports in US dollars and in accordance with IFRS as issued by the IASB MONTEVIDEO, Uruguay, May 14, 2024 (GLOBE NEWSWIRE) -- DLocal Limited ("dLocal", "we", "us", and "our") (NASDAQ:DLO), a technology - first payments platform today announced its financial results for the first quarter ended March 31, 2024. "We started the year with strong TPV growth, achieving a record quarterly TPV of US$5.3 billion, increasing nearly 50% YoY. TPV growth was solid across many verticals, with ecommerce nearly tripling, remittances practically doubling, and ride-hailing, SaaS, each growing north of 50% YoY. All this is a testament to the value our solution offers to our merchants across diverse verticals, and our increasingly strong competitive position and sustained share of wallet gains. In addition, in 1Q24, we saw cross-border ("XB") processing hit a new record of $2.4B in TPV with volumes increasing by 9% QoQ. Cross-border remains the core of our value proposition, and witnessing a return to sequential growth is a great indicator. Local-to-local, despite being flat QoQ driven by seasonal effects, delivered TPV growth at nearly 80% YoY. The ongoing success of our local processing confirms that our world-class orchestration offering - which includes our AI powered smart routing to optimize traffic routes to deliver higher conversion rates, robust fallback and redundancy offering, efficient fraud prevention engines, best in class KYC/compliance layer, and merchant specific features - provides to global merchants a superior offer to what they can receive through direct integrations to local acquirers and alternative payment methods. Our payouts business grew 17% QoQ and over 50% YoY. The quarterly pick up is particularly interesting, and driven by a strong Q1 ramp-up in remittance corridors for our partners. This growing number of corridors not only represents an interesting vertical in itself, but it also fosters opportunities for cross border growth in pay-ins as it improves the liquidity and pricing we can offer our merchants. We believe nothing sets us up better for long term success than this kind of sustained TPV growth compounding over multiple years. As we move down our P&L, the quarter is less of a clear cut success than our TPV growth indicates. We delivered solid revenue growth, north of 30% YoY, while gross profit growth was relatively flat, at 2% YoY. Revenue and gross profit decreased 2% and 10% QoQ. Mixed results during the first quarter are explained by a few relevant drivers: i) one of our largest merchants achieved a new level in our tiered pricing scheme, and also re-negotiated fees, as their contract came up for renewal. Given our still relatively high concentration on Top 10 merchants, such a higher volume price tiering alongside the renegotiation directly impacted our revenue growth; ii) our product mix shifted towards lower monetizing pay-out volumes, with core pay-in verticals such as e-commerce and advertising are seasonally weaker in Q1; iii) delays from our merchants in a few important new launches that were scheduled for Q1 slowing down anticipated volume ramp-ups; iv) tighter FX spreads in Argentina and lower cross-border mix compared to a year ago. From a geographic standpoint, we saw very strong performance in our key markets, Brazil and Mexico, with revenues increasing 89% and 50% YoY respectively, and gross profit growing, 63% and 44% YoY, respectively. The weaker QoQ performance was driven by seasonality in the commerce vertical, in addition to the higher volume price tiering alongside the renegotiation of this top merchant. In Mexico, although revenues dropped, gross profit grew driven by improvements in our cost structure as we gained scale and negotiating power vis-à-vis processors. In Africa and Asia, we saw strong revenue and gross profit growth, increasing by 51% and 60% YoY, respectively. We decided to sustain our planned investment increases as we continue building dLocal for the long-term, despite the gross profit presented in this quarter. The main areas of expense increases QoQ were: tech-related expenses, including engineers, software licenses and infrastructure expenses; and salaries and wages across our operations, compliance and finance teams. We net added 50 FTEs during the quarter, growing our global team to 951 people, with most of the hires in tech, sales and operations in Uruguay, Argentina, Brazil and Spain. As a result, the higher OPEX alongside the weaker gross profit, led to Adjusted EBITDA of $37M declining 19% YoY and 25% QoQ. Although we acknowledge the quarterly gross profit results are disappointing, we do not see a structural issue. Trend-wise, performance improved as the quarter progressed, with a weak first two months of the year, totalling $37M, while March gross profit came in at $25M, above the monthly average for Q4. We are confident our gross profit will rebound, and we view these OPEX investments in capability building, internal mechanisms, and technology, as strategic for our long term success. Our liquidity position remains robust, ending 1Q24 with US$320 million of funds, including US$212 million of available cash for general corporate purposes and US$108 million of short-term investments. Considering the robust cash position, the Board has authorised a new share repurchase program to purchase Class A common shares of up to $200 million dollars. The plan will expire on the earliest of May 2025 or upon reaching the $200 million dollar repurchase limit. The share repurchases may be made from time to time through open market transactions, block trades, privately negotiated transactions or otherwise, and are subject to market and business conditions, levels of available liquidity, cash requirements for other purposes, regulatory considerations, and other relevant factors. This share repurchase program underpins our confidence in the prospects of our business and our ability to continue to generate sufficient future cash to carry out our ambitious strategic plan. Our actual performance versus guidance will hinge mainly on our own execution, but will be affected by a few exogenous variables: macroeconomic conditions, merchant go-live timing on signed contracts, and regulatory changes, and FX rates, to name a few. We manage and de-risk these variables as much as possible, but they still hold a level of unpredictability that is characteristic of emerging markets. That is simply the reality of our business. As we continue to gain scale and improve our diversification in terms of revenues and geographies, we believe these variables will impact to a lesser extent our results. With that context in mind, we are working on delivering on our 2024 guidance. At this point, and to the best of our current data and expectations, we believe we are tracking towards those objectives, although with greater likelihood of coming in towards the lower end of the issued ranges. I want to close by thanking our global team, our valued customers, and our investors for their continued support. The year just started and we see plenty of opportunities and growth, but most importantly, we continue to have a high conviction in our massive opportunity in the long run. The share buyback is a testament of this conviction. We steer our business for decades, not quarters. We remain fully committed to realizing our long-term ambition: unlocking the potential of emerging markets." said Pedro Arnt, CEO of dLocal First quarter 2024 Financial Highlights Total Payment Volume ("TPV") reached a record US$5.3 billion in the first quarter, up 49% year-over-year compared to US$3.6 billion in the first quarter of 2023 and up 4% compared to US$5.1 billion in the fourth quarter of 2023. Revenues amounted to US$184.4 million, up 34% year-over-year compared to US$137.3 million in the first quarter of 2023 and down 2% compared to US$188.0 million in the fourth quarter of 2023. This sequential decline was mostly driven by seasonality, with Q4 being a very strong quarter for our ecommerce vertical. Additionally, we saw one of our largest merchants achieve a new level in our tiered pricing scheme, and also re-negotiate fees, as their contract came up for renewal. Gross profit was US$63.0 million in the first quarter of 2024, up 2% compared to US$61.8 million in the first quarter of 2023 and down 10% compared to US$69.7 million in the fourth quarter of 2023. QoQ gross profit was negatively impacted by the abovementioned seasonality and renegotiation with a top merchant, in addition to business mix with higher payout volumes. As a result, gross profit margin was 34% in this quarter, compared to 45% in the first quarter of 2023 and 37% in the fourth quarter of 2023. Gross profit over TPV was at 1.2% decreasing from 1.7% in the first quarter of 2023 and from 1.4% in the fourth quarter of 2023, mainly due to shifts in business mix, with higher share of pay-outs, in addition to the abovementioned new price tiering and renegotiation, and finally the continued growth of other Tier 0 merchants. Operating income was US$26.9 million, down 32% compared to US$39.4 million in the first quarter of 2023 and down 34% compared to US$41.0 million in the fourth quarter of 2023. Operating income was impacted by the lower gross profit, in addition to higher operating expenses increasing by 60% YoY and 26% QoQ as we continued to further invest in building out the team, capabilities, and establishing processes and systems to support our long term growth ambitions. The main areas of expense increases were: tech-related expenses, including engineers, software licenses and infrastructure expenses; and salaries and wages across our operations, compliance and finance teams. As a result, Adjusted EBITDA was US$36.8 million, down 19% compared to US$45.5 million in the first quarter of 2023 and down 25% compared to US$49.2 million in the fourth quarter of 2023. Adjusted EBITDA margin was 20%, compared to the 33% recorded in the first quarter of 2023 and 26% in the fourth quarter of 2023. Sequentially, out of the 6 p.p. decline, half was driven by previously noted gross profit compression and the remaining by incremental OPEX. Following the same trend, Adjusted EBITDA over gross profit contracted to 58%, compared to 74% in the first quarter of 2023 and 71% in the fourth quarter of 2023. Net financial income was US$0.3 million, compared to US$1.4 million in the first quarter of 2023 and US$1.0 million in the fourth quarter of 2023. Effective income tax rate was 29%, compared to 11% in the first quarter of 2023 and 21% in the fourth quarter of 2023, as a result of the mix in revenues shifting towards higher tax entities. Net income for the first quarter of 2024 was US$17.7 million, or US$0.06 per diluted share, down 50% compared to a profit of US$35.5 million, or US$0.11 per diluted share, for the first quarter of 2023 and down 38% compared to a profit of US$28.5 million, or US$0.10 per diluted share for the fourth quarter of 2023. During the first quarter of 2024, net income was mostly affected by lower EBITDA and higher tax rate. As of March 31, 2024, dLocal had US$572.4 million in cash and cash equivalents, including US$211.9 million of own funds and US$360.5 million of merchants' funds. The consolidated cash position increased by US$54.5 million from US$517.9 million as of March 31, 2023. When compared to the US$536.2 million cash position as of December 31, 2023, it increased by US$36.2 million. The following table summarizes our key performance metrics:   Three months ended 31 of March   2024  2023  % change Key Performance metrics (In millions of US$ except for %) TPV 5,310   3,574   49% Revenue 184.4   137.3   34% Gross Profit 63.0   61.8   2% Gross Profit margin 34 % 45 % -11p.p Adjusted EBITDA 36.8   45.5   -19% Adjusted EBITDA margin 20 % 33 % -13p.p Adjusted EBITDA/Gross Profit 58 % 74 % -15p.p Profit 17.7   35.5   -50% Profit margin 10 % 26 % -16p.p First quarter 2024 Business Highlights During the first quarter of 2024, pay-ins TPV increased by 46% year-over-year and decreased by 1% quarter-over-quarter to US$3.7 billion, accounting for 69% of the TPV. Pay-outs TPV increased by 54% year-over-year and 17% quarter-over-quarter to US$1.7 billion, accounting for the remaining 31% of the TPV. Cross-border TPV increased by 24% year-over-year and by 9% quarter-over-quarter to US$2.4 billion. Cross-border volume accounted for 46% of the TPV in the first quarter of 2024. Local-to-local TPV increased by 79% year-over-year and remained flat quarter-over-quarter at US$2.9 billion. Local-to-local volume accounted for 54% of the TPV in the first quarter of 2024. LatAm revenue increased 28% year-over-year to US$125.4 million, accounting for 68% of total revenue. Year-over-year we continue to experience strong revenue growth in our largest markets, Brazil and Mexico, with revenues increasing 89% year-over-year in Brazil and 50% year-over-year in Mexico. YoY revenue growth was negatively impacted by Argentina, down 31% YoY. Lower revenues in Argentina were driven by several factors including more than 70% devaluation of the official rate; tighter FX spreads, combined with a higher proportion of local-to-local volume; in addition to lower TPV given that many of our merchants have pulled back from that market given the macro instability of the last 12 months. Nevertheless, we continue to see Argentina as a key geography for our business and believe as the country stabilizes, it should come back to growth. Sequentially, LatAm revenue contracted by 5% mainly driven by seasonality, with Q4 being a very strong quarter for our ecommerce vertical, in addition to the new price tiering and renegotiation with one of our largest merchants. These two factors largely explain the 14% and 4% quarter-over-quarter decreases in Brazil and Mexico revenues, respectively. These decreases were partially offset by Argentina, that increased by 31% quarter-over-quarter, mainly driven by higher cross border settlements. Africa and Asia revenue grew by 51% year-over-year and 5% quarter-over-quarter to US$59.0 million, accounting for the remaining 32% of total revenue. Part of the growth was driven by Egypt with revenues growing by 11x year-over-year and 2x quarter-over-quarter. The growth in Egypt and other Africa and Asia more than offset the -73% year-ver-year and -74% quarter-over-quarter decrease in Nigeria revenues mostly driven by: (i) the tightening of spreads between market and official rates after the Naira devaluation in February 2024, and (ii) higher proportion of L2L volumes and (iii) a sequential decline in TPV as our Financial Services vertical saw a material drop in volume after the devaluation, with less fx trades occurring on our merchants' platforms. LatAm gross profit decreased by 8% year-over-year and 11% quarter-over-quarter to US$48.6 million, accounting for 77% of total gross profit. This result was significantly impacted by Argentina, with gross profit down 71% YoY, given the lower FX revenue, as in the past we benefited from the wide FX spreads, alongside lower cross border share. Excluding Argentina, gross profit in LatAm grew 24% YoY, driven primarily by the strong performance in our most competitive markets with Brazil up 63% and Mexico up 44% YoY. Sequentially, the contraction was mainly driven by Brazil due to the following drivers: (i) the previously mentioned key merchant new price tiering and renegotiation, (ii) the ecommerce seasonality, and (iii) the increased pay-out mix. Africa and Asia gross profit increased by 60% year-over-year to US$14.4 million, accounting for the remaining 23% of total gross profit. This result was supported by a strong growth in Egypt with gross profit up 4x driven by our merchants' growth in that country. Similarly to Argentina, in Egypt we benefited from the wide spreads and our liquidity position having developed XB flows of pay-ins and pay-outs. The gross profit growth in Egypt was partially offset by Nigeria, where gross profit was down 78% YoY as a consequence of a strong devaluation of the Naira. Sequentially, gross profit decreased by 4%, also attributable to Nigeria. During the quarter, dLocal continued delivering strong revenue growth both from existing and from new customers. Revenue from Existing Merchants increased to US$177.1 million and the net revenue retention rate, or NRR, reached 129%. Revenue from New Merchants was US$7.3 million in the first quarter of 2024. The tables below present a breakdown of dLocal's TPV by product and type of flow: In millions of US$ except for % Three months ended 31 of March   2024 % share 2023 % share Pay-ins 3,657 69% 2,503 70% Pay-outs 1,653 31% 1,072 30% Total TPV 5,310 100% 3,574 100% In millions of US$ except for % Three months ended 31 of March   2024 % share 2023 % share Cross-border 2,426 46% 1,960 55% Local-to-local 2,884 54% 1,615 45% Total TPV 5,310 100% 3,574 100% The tables below present a breakdown of dLocal's revenue by geography: In millions of US$ except for % Three months ended 31 of March   2024 % share 2023 % share Latin America 125.4 68% 98.2 72% Brazil 43.1 23% 22.8 17% Argentina 13.8 7% 20.0 15% Mexico 34.0 18% 22.7 17% Chile 12.4 7% 14.2 10% Other LatAm 22.1 12% 18.5 13%           Africa & Asia 59.0 32%