Second Quarter 2024US$6.0 billion Total Processed Volume, up 38% year-over-year and 14% quarter-over-quarterRevenue of US$171 million, up 6% year-over-year and down 7% quarter-over-quarter100% Net Revenue Retention RateGross Profit of US$70 million, down 1% year-over-year and up 11% quarter-over-quarterAdjusted EBITDA of US$43 million, down 18% year-over-year and up 16% quarter-over-quarter dLocal reports in US dollars and in accordance with IFRS as issued by the IASB. MONTEVIDEO, Uruguay, Aug. 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 second quarter ended June 30, 2024. We continue to see strong growth in our business, achieving another quarterly record of $6.0 billion of TPV during the second quarter of 2024, an increase of nearly 40% year-over-year. This occurred despite the tough comparison with last year's 80% growth during the same period. The evolution of this key metric demonstrates our continued ability to grow as we gain share of wallet from our global merchant base and add new merchants to the mix. It also underscores our unique value proposition as a trusted partner for some of the largest and most sophisticated global companies across emerging markets. The TPV performance was good across multiple verticals, including continued strong growth in the commerce, on-demand delivery, and remittance verticals; accelerating growth from SaaS and ride-hailing. This kind of sustained and well diversified TPV growth, with a focused commitment to low-risk high-reputation verticals, sets us up well for long-term success. We believe that our year-over-year growth showcases a unique in class combination of growth while focusing on reputable verticals, which sets us apart from relevant comps base, who either grow less, over index high-risk verticals, or do both. Net take rates have held up sequentially, despite unfavorable events, like repricing by our largest merchant at the beginning of the year, material currency devaluations in Nigeria and Egypt, and continued weakening across most emerging markets currencies. The stable sequential net take rate and growing TPV during the quarter translated to 11% quarter-over-quarter gross profit growth. Our OPEX, excluding non-cash share-based compensation, grew by only $1 million sequentially, after previous quarters of sequential growth above $4 million, as we adjusted our cash spend to the weaker gross profit. As mentioned previously, there is a limit to how much we are willing to defend margins in the short-term, as we are committed to certain investments, which are crucial for our long-term success, particularly those in our engineering pool, back-office capabilities and behind our license portfolio. But, to balance this out, we are always revising other discretionary spending to make sure it matches our topline performance and is aligned with our general philosophy of frugality. Consequently, our Adjusted EBITDA reached $43 million, reflecting our still lean structure and disciplined spending. Our cash generation also accelerated versus the prior quarter, posting a $35 million of Free Cash Flow from own funds, a conversion rate of 77%, up $23 million and 7 percentage points compared to the second quarter of 2023. These highlights also come with certain challenges that we are focused on rapidly addressing. Year-over-year gross profit performance was flat, primarily due to a 13% decline in LatAm. This decline was driven by (i) the Argentine FX devaluation and (ii) the repricing by our largest merchant in Brazil and Mexico. Despite stellar Africa and Asia gross profit growth of 79% year-over-year, it did not suffice to offset those two events. Taking a step back from a short-term quarterly prism, dLocal remains an incredibly strong company, with a fantastic total addressable market, attractive business model and extremely promising future, that at some point will be reflected in capital market performance. To keep things in perspective: We maintain strong product market validation as witnessed by almost 40% year-over-year and 14% quarter-over-quarter TPV growth; Still run a high margin financial model with Adjusted EBITDA to Gross Profit at 60%+ and ability to scale from there to previous levels; Cash conversion is strong and growing as EBITDA increased sequentially, with a cash conversion close to 100% for the last twelve months. When we analyze the potential of all this compounded over time, it is hard to not be optimistic about our future, despite the inherent challenges and volatility existent in emerging markets. The long term future is bright, and our own ability to execute is the most important factor. Our optimism in the future is also reflected in our capital allocation strategy. Our business has an attractive cash generation profile, and we see upside in our stock as we grow and scale; and as a consequence of this we have bought back stock during the quarter at a rapid pace. As known, emerging markets are inherently volatile, which can, and often do, impact our short-term results. However, our long-term view remains optimistic as stated earlier. The quarterly bottom-up review of our pipeline and existing contracts, where we project out probable market growth, and new commercial opportunities on a merchant-by-merchant basis, gets us to the following revised outlook for 2024: TPV of $24.5-26.5 billion; due to slower volume ramp-ups, pipeline volume even more skewed towards Tier 0 merchants, and weakening currencies in emerging markets Gross profit of $280-300 million; in addition to the reasons outlined above, driven by increased local-to-local flows, and Adjusted EBITDA of $180-200 million, supporting crucial long-term investments that enhance our value proposition and internal controls We continue to thrive across emerging markets, embracing their complexities and delivering simple, effective solutions to our merchants. Our focus remains on execution and long-term growth. Our commitment to our merchants and our expertise in these regions enable us to consistently win business from these global merchants. As we scale, this growth will help mitigate short-term volatility and dilute market fluctuations. Therefore, it is crucial to continue focusing on TPV growth, increasing our share of wallet, and adding new clients - all of which we have consistently delivered since the company's inception, while driving operational leverage in the business once we get through the current disciplined investment cycle we are in. We are thankful for the continued support and confidence in our vision. We are committed to executing our strategy and driving long-term value for our shareholders. We look forward to updating you on our progress in the coming quarters. Second quarter 2024 Financial Highlights Total Payment Volume ("TPV") reached a record US$6.0 billion in the second quarter, up 38% year-over-year compared to US$4.4 billion in the second quarter of 2023 and up 14% compared to US$5.3 billion in the first quarter of 2024. Revenues amounted to US$171.3 million, up 6% year-over-year compared to US$161.1 million in the second quarter of 2023 and down 7% compared to US$184.4 million in the first quarter of 2024. This quarter-over-quarter decline was mostly driven by the currency devaluation in Nigeria and Egypt, despite the healthy TPV growth. Gross profit was US$69.8 million in the second quarter of 2024, down 1% compared to US$70.8 million in the second quarter of 2023 and up 11% compared to US$63.0 million in the first quarter of 2024. The improvement in gross profit quarter-over-quarter was primarily due to (i) temporary FX dynamics in Nigeria; (ii) positive performance of Argentina, Other LatAm and Other Africa and Asia countries; and (iii) Brazil, with lower processing costs following renegotiation with processors, and change in payment mix, which partially offset the impact of key merchant repricing (full impact in second quarter of 2024 versus two months in first quarter of 2024). As a result, gross profit margin was 41% in this quarter, compared to 44% in the second quarter of 2023 and 34% in the first quarter of 2024. Gross profit over TPV was at 1.2% decreasing from 1.6% in the second quarter of 2023 and flat compared to the first quarter of 2024, mainly due to FX dynamics in Nigeria and Egypt and renegotiation with processors in Brazil, which combined were sufficient to offset the incremental sequential impact of the above-mentioned top merchant repricing.. Operating income was US$30.2 million, down 37% compared to US$47.8 million in the second quarter of 2023 and up 12% compared to US$26.9 million in the first quarter of 2024, impacted by higher gross profit and disciplined OPEX investment. In this context, operating expenses grew by 72% year-over-year and 10% quarter-over-quarter, with a clear allocation tilt towards investments focused on Product Development & IT capabilities; coupled with investment to strengthen our back-office capabilities for future growth. In addition, in the second quarter of 2024, we recorded an extraordinary US$1.6 million operating loss as we wrote-off certain amounts related to merchants/processors off-boarded by dLocal. As a result, Adjusted EBITDA was US$42.7 million , down 18% compared to US$52.0 million in the second quarter of 2023 and up 16% compared to US$36.8 million in the first quarter of 2024. Adjusted EBITDA margin was 25%, compared to the 32% recorded in the second quarter of 2023 and 20% in the first quarter of 2024. On the annual comparison, the decrease is explained by the gross profit dynamics and our decision to sustain many of the long-term investments, as previously mentioned. Following the same trend, Adjusted EBITDA over gross profit of 61% decreased compared to 74% in the second quarter of 2023 and increased compared to 58% in the first quarter of 2024. Net financial income was US$28.0 million, compared to US$7.5 million in the second quarter of 2023 and US$0.3 million in the first quarter of 2024. Effective income tax rate was 18%, compared to 16% in the second quarter of 2023 and 29% in the first quarter of 2024, closer to levels of previous quarters. Net income for the second quarter of 2024 was US$46.2 million, or US$0.15 per diluted share, up 3% compared to a profit of US$44.8 million, or US$0.15 per diluted share, for the second quarter of 2023 and up 161% compared to a profit of US$17.7 million, or US$0.06 per diluted share for the first quarter of 2024. During the second quarter of 2024, net income was mostly impacted by higher finance income, given the $23 million non-cash mark to market effect related to Argentine bonds investments used to hedge our local currency position in that market. As of June 30, 2024, dLocal had US$531.6 million in cash and cash equivalents, including US$186.2 million of own funds and US$345.4 million of merchants' funds. The consolidated cash position decreased by US$17.8 million from US$549.4 million as of June 30, 2023. When compared to the US$572.4 million cash position as of March 31, 2024, it decreased by US$40.7 million, mainly explained by the US$81.8 million of own funds used to buy back the company's own shares, in connection to the US$200 million Share Buyback Program announced in May 2024. The following table summarizes our key performance metrics:   Three months ended 30 of June Six months ended 30 of June   2024 2023 % change 2024 2023 % change Key Performance metrics (In millions of US$ except for %) TPV 6,035 4,373 38% 11,346 7,948 43% Revenue 171.3 161.1 6% 355.7 298.4 19% Gross Profit 69.8 70.8 -1% 132.8 132.6 0% Gross Profit margin 41% 44% -3p.p 37% 44% -7p.p Adjusted EBITDA 42.7 52.0 -18% 79.5 97.5 -19% Adjusted EBITDA margin 25% 32% -7p.p 22% 33% -10p.p Adjusted EBITDA/Gross Profit 61% 74% -12p.p 60% 74% -14p.p Profit 46.2 44.8 3% 64.0 80.2 -20% Profit margin 27% 28% -1p.p 18% 27% -9p.p               First quarter 2024 Business Highlights During the second quarter of 2024, pay-ins TPV increased 34% year-over-year and 17% quarter-over-quarter to US$4.3 billion, accounting for 71% of the TPV. Pay-outs TPV increased by 49% year-over-year and 7% quarter-over-quarter to US$1.8 billion, accounting for the remaining 29% of the TPV. Cross-border TPV increased by 22% year-over-year and 11% quarter-over-quarter to US$2.7 billion. Cross-border volume accounted for 45% of the TPV in the second quarter of 2024. Local-to-local TPV increased by 55% year-over-year and 16% quarter-over-quarter to US$3.3 billion. Local-to- local volume accounted for 55% of the TPV in the second quarter of 2024. LatAm revenue increased 9% year-over-year to US$138.7 million, accounting for 81% of total revenue. On the annual comparison, the growth was primarily driven by commerce and streaming in Mexico, and strong performance of Other LatAm, across different verticals. Sequentially, LatAm revenue grew by 11% mainly driven by recovery in Argentina revenues due to strong performance across commerce and on-demand delivery verticals. In the Africa and Asia region, revenue decreased by 5% year-over-year, primarily driven by lower revenues in Nigeria due to Naira devaluation in February 2024, despite strong growth performance in Egypt across advertising and streaming verticals; and in Other Africa and Asia. The currency devaluation is also the main driver of the sequential decrease. LatAm gross profit decreased by 13% year-over-year and increased by 10% quarter-over-quarter to US$53.5 million, accounting for 77% of total gross profit. Most of the year-over-year decline is explained by Argentina, due to lower FX spreads following the currency devaluation in December 2023. In the region, gross profit was also impacted by Mexico, due to merchant repricing and local-to-local increase; and by Chile, given lower cross-border volumes. Other LatAm markets showed a 10% year-over-year increase in gross profit, driven by Tier 0 merchants' growth. Sequentially, the growth was mainly driven by the (i) growth in Argentina, and other LatAm markets, primarily Colombia and Costa Rica; and (ii) Brazil, with lower processing costs following renegotiation with processors, coupled with change in payment mix. Those two factors partially offset the impact of a key merchant repricing, with full impact in the second quarter of 2024 compared to 2 months in previous one. Africa and Asia gross profit increased by 79% year-over-year to US$16.3 million, accounting for the remaining 23% of total gross profit. This annual comparison is explained by our overall growth in Egypt; ramp-up of our merchants in South Africa, primarily in the commerce vertical; and temporary FX dynamics in Nigeria. Sequentially, gross profit increased by 13%, attributable to temporary FX dynamics in Nigeria and growth in Other Africa and Asia. During the quarter, Revenue from Existing Merchants reached US$161.7 million compared to US$ 177.1 million in the first quarter of 2024. The quarter-over-quarter comparison was negatively affected by the currency devaluation, as previously discussed, despite healthy volume growth. On the annual comparison, Revenue from Existing Merchants increased by 8% and the net revenue retention rate, or NRR, reached 100%, which was impacted by Nigeria currency devaluation. Revenue from New Merchants accounted for US$9.6 million in the second quarter of 2024 compared to US$ 11.2 million in the same quarter of the prior year. 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 30 of June Six months ended 30 of June   2024 % share 2023 % share 2024 % share 2023 % share Pay-ins 4,273 71 % 3,190 73 % 7,930 70 % 5,693 72 % Pay-outs 1,763 29 % 1,184 27 % 3,416 30 % 2,255 28 % Total TPV 6,035 100 % 4,373 100 % 11,346 100 % 7,948 100 % In millions of US$ except for % Three months ended 30 of June Six months ended 30 of June   2024 % share 2023 % share 2024 % share 2023 % share Cross-border 2,701 45 % 2,219 51 % 5,127 45 % 4,179 53 % Local-to-local 3,334 55 % 2,154 49 % 6,219 55 % 3,769 47 % Total TPV 6,035 100 % 4,373 100 % 11,346 100 % 7,948 100 %                           The tables below present a breakdown of dLocal's revenue by geography: In millions of US$ except for % Three months ended 30 of June Six months ended 30 of June   2024 % share 2023 % share 2024 % share 2023 % share Latin America 138.7 81 % 126.9 79 % 264.1 74 % 225.1 75 % Brazil 42.3 25 % 41.2 26 % 85.3 24 % 64.0 21 % Argentina 20.5 12 % 20.7 13 % 34.3 10 % 40.7 14 % Mexico 35.8 21 % 28.3 18 % 69.9 20 % 51.0 17 % Chile 12.3 7 % 14.2 9 % 24.7 7 % 28.4 10 % Other LatAm 27.8 16 % 22.5 14 % 49.9 14 % 41.0 14 %                   Africa & Asia 32.6 19 % 34.3 21 % 91.6 26 % 73.3 25 % Nigeria 1.1 1 % 20.4 13 % 8.3 2 % 47.3 16 % Egypt 15.0 9 % 4.7 3 % 54.0 15 % 8.1 3 % Other Africa & Asia 16.5 10 % 9.2 6 % 29.2 8