DLocal (DLO) AI Stock Analysis

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DLocal

(NASDAQ:DLO)

Rating:81Outperform

Price Target:

$13.00

▲(16.49%Upside)

DLocal's stock is rated positively due to strong financial performance, robust technical indicators, and an encouraging earnings call. The company's growth and profitability, combined with strategic investments, support a promising outlook. However, valuation concerns and cash flow challenges slightly offset the score.

Positive Factors

Dividend Policy

The company announced its dividend policy, planning to distribute 30% of free cash flow annually, which should bring extra shareholders’ returns.

Management Credibility

New management brings more credibility to the business, enhancing future potential value generation.

Negative Factors

Financial Performance

Shares of DLocal are down sharply as 4Q results had a lower gross profit take rate, and guidance was light on GP/GP take rate/adj. EBITDA.

Market Volatility

Risks to the investment thesis include emerging markets volatility and regulatory and compliance challenges.

Revenue Growth

Revenue take rate and gross take rate contracted sequentially, coming well below consensus, and expenses grew more than expected.

DLocal (DLO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$3.19B

Dividend YieldN/A

Average Volume (3M)1.38M

Price to Earnings (P/E)24.7

Beta (1Y)0.90

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees1,095

SectorTechnology

Sector Strength86

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.17

Shares Outstanding151,420,940

10 Day Avg. Volume2,289,975

30 Day Avg. Volume1,377,468

Financial Highlights & Ratios

PEG Ratio0.94

Price to Book (P/B)6.14

Price to Sales (P/S)0.00

P/FCF Ratio-1.94K

Enterprise Value/Market Cap0.87

Enterprise Value/Revenue0.94

Enterprise Value/Gross Profit8.75

Enterprise Value/Ebitda3.74

Forecast

1Y Price Target

$13.37

Price Target Upside19.80% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

DLocal Business Overview & Revenue Model

Company DescriptiondLocal (DLO) is a leading technology-first payments platform company that enables global merchants to connect with billions of consumers in emerging markets. Operating across numerous sectors including retail, travel, and financial services, dLocal provides a seamless solution for cross-border payments, offering a wide range of payment methods and currencies to facilitate transactions between businesses and consumers in over 40 countries.

How the Company Makes MoneydLocal makes money primarily through transaction fees charged to merchants on each payment processed through its platform. The company leverages its proprietary technology to offer a range of payment solutions tailored to the specific needs of each market, enabling local and cross-border transactions. Key revenue streams include commission fees on transactions, service fees for value-added services, and currency exchange fees for facilitating payments in different currencies. dLocal's strategic partnerships with global merchants and local payment providers help expand its reach and enhance its service offerings, contributing significantly to its earnings.

DLocal Earnings Call Summary

Earnings Call Date:May 14, 2025

(Q1-2025)

% Change Since: 14.93%|

Next Earnings Date:Aug 13, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance with record revenue and gross profit, significant TPV growth, and strategic advancements in partnerships and technology. However, challenges such as declines in Brazil's revenue and increased costs in certain markets were noted. The announcement of a dividend policy reflects confidence in cash generation capabilities.

Q1-2025 Updates

Positive Updates

Record Highs in Revenue and Gross Profit

Revenue reached a record high of $217 million, and gross profit also hit a record of $85 million, demonstrating strong operational performance.

Significant TPV Growth

Total Payment Volume (TPV) reached $8 billion, reflecting a 53% year-over-year growth or 72% in constant currency, and a 5% quarter-over-quarter increase.

Strong Geographic Diversification

Notable contributions from Chile, Pakistan, Nigeria, Turkey, Brazil, and other LatAm markets driven by cross-border payment volumes and sector growth in remittances, commerce, and streaming.

Strategic Partnerships and Technological Advancements

Strengthened partnerships with companies like Temu, Zepz, and Rappi. Technological advancements included AI and automation to improve efficiency, such as a 1.2 percentage point increase in conversion rates through machine learning models.

High Free Cash Flow Conversion

Free cash flow to net income conversion was 85%, showing strong cash generation capability.

Dividend Policy and Extraordinary Dividend

Announced a one-off dividend of approximately $0.525 per common share and a new policy providing annual dividends equal to 30% of the company's free cash flow.

Negative Updates

Brazil Revenue and Gross Profit Decline

Brazil reported a decline in revenue by 20% year-over-year and gross profit down 27%, primarily due to migration to a lower take rate model and one-off incremental processing costs.

Softness in Mexico

Local-to-local TPV decreased by 3% quarter-over-quarter, with partial loss of share of wallet with a large merchant impacting volumes.

Increased Processing Costs in Africa

Higher processing costs in South Africa and Nigeria impacted the gross profit, affecting the performance in these markets.

Company Guidance

During dLocal's First Quarter 2025 Results Call, several key financial and operational metrics were highlighted, showcasing the company's robust performance. Total Payment Volume (TPV) reached $8 billion, representing a 53% year-over-year growth and a 5% quarter-over-quarter increase. The net retention rate of TPV was an impressive 144%. Revenue and gross profit hit record highs of $217 million and $85 million, respectively. The adjusted EBITDA to gross profit ratio improved slightly to 68%, reflecting effective scaling. Free cash flow to net income conversion was at 85%, underscoring a strong cash-generating model. The company noted significant growth in cross-border payment volumes and emphasized continued investments in technology and operations to support sustainable financial performance. They also announced a dividend policy, with a one-off dividend of $0.525 per share, reflecting a total outlay of $150 million, aligning with their strategy to deliver shareholder returns while maintaining flexibility for future growth opportunities.

DLocal Financial Statement Overview

Summary

DLocal shows strong revenue growth and profitability with efficient operations and low leverage. The balance sheet is solid, but challenges in cash flow conversion need addressing to enhance liquidity.

Income Statement

Very Positive

DLocal has demonstrated strong revenue growth, with an impressive increase from $418.9 million in 2022 to $778.3 million in TTM 2025. The gross profit margin remains robust at approximately 40.7% for TTM 2025, showing efficient cost management. The net profit margin has improved slightly to 19.2% in TTM 2025, reflecting better profitability. The EBIT and EBITDA margins are solid at 20.5% and 28.5% respectively, indicating strong operational efficiency.

Balance Sheet

Positive

The company has a healthy equity position with an equity ratio of 43.9% in TTM 2025, suggesting good financial stability. The debt-to-equity ratio is very low at 0.007, indicating minimal leverage and low financial risk. Return on equity is strong at 27.4% in TTM 2025, highlighting effective use of equity to generate profits.

Cash Flow

Positive

DLocal's free cash flow has fluctuated, with a decrease observed in TTM 2025 to -$1.7 million. However, the operating cash flow to net income ratio is positive at 0.15, indicating some alignment between cash generation and profitability. The free cash flow to net income ratio is -0.01, reflecting challenges in converting net income to free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	778.30M	745.97M	650.35M	418.93M	244.12M	104.14M
Gross Profit	316.58M	294.67M	276.86M	202.17M	130.44M	60.08M
EBITDA	221.91M	168.91M	184.21M	153.10M	90.79M	32.48M
Net Income	149.34M	120.42M	148.96M	108.68M	77.88M	28.18M
Balance Sheet
Total Assets	1.24B	1.17B	1.08B	826.30M	583.01M	200.47M
Cash, Cash Equivalents and Short-Term Investments	636.99M	554.49M	638.84M	469.39M	337.20M	52.00M
Total Debt	3.93M	54.45M	3.96M	4.08M	8.94M	218.00K
Total Liabilities	696.45M	682.34M	629.31M	426.68M	302.71M	155.42M
Stockholders Equity	545.08M	488.89M	455.03M	399.63M	280.32M	45.05M
Cash Flow
Free Cash Flow	-1.69M	-34.49M	275.23M	142.10M	60.47M	84.60M
Operating Cash Flow	22.66M	-32.78M	293.45M	154.45M	108.49M	88.49M
Investing Cash Flow	-25.51M	-17.75M	-84.67M	4.30M	-37.94M	3.65M
Financing Cash Flow	-59.10M	-68.59M	-133.87M	-27.33M	153.75M	-15.20M

DLocal Technical Analysis

Technical Analysis Sentiment

Positive

Last Price11.16

Price Trends

50DMA

10.05

Positive

100DMA

9.82

Positive

200DMA

9.84

Positive

Market Momentum

MACD

0.31

Negative

RSI

59.77

Neutral

STOCH

75.92

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLO, the sentiment is Positive. The current price of 11.16 is above the 20-day moving average (MA) of 10.60, above the 50-day MA of 10.05, and above the 200-day MA of 9.84, indicating a bullish trend. The MACD of 0.31 indicates Negative momentum. The RSI at 59.77 is Neutral, neither overbought nor oversold. The STOCH value of 75.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DLO.

DLocal Peers Comparison

Overall Rating

UnderperformOutperform

Sector (50)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLO	81 Outperform	$3.19B	24.71	26.10%	―	―	―
PAYO	75 Outperform	$2.51B	23.18	15.97%	―	14.86%	-0.94%
PAGS	75 Outperform	$3.10B	7.66	14.36%	1.49%	2.38%	9.88%
TUYA	70 Outperform	$1.45B	73.95	1.98%	4.05%	27.63%	―
DOCN	66 Neutral	$2.55B	26.01	-41.63%	―	13.21%	109.61%
STNE	64 Neutral	$4.38B	8.73	-8.85%	―	-14.03%	-167.03%
Sector *	50 Neutral	AU$1.48B	1.28	-28.24%	3.26%	16.24%	-7.89%

* Technology Sector Average

Performance Comparison

DLO

DLocal

11.16

3.48

45.31%

PAGS

Pagseguro Digital

9.42

-2.38

-20.17%

STNE

Stoneco

16.00

3.66

29.66%

PAYO

Payoneer

6.93

1.47

26.92%

TUYA

Tuya

2.47

0.95

62.50%

DOCN

DigitalOcean Holdings

28.40

-6.32

-18.20%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 28, 2025