DLocal (DLO) AI Stock Analysis

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DLocal

(NASDAQ:DLO)

Rating:82Outperform

Price Target:

$13.00

▲(25.12%Upside)

DLocal is performing well with strong revenue growth and strategic partnerships, highlighted by record highs in revenue and gross profit. The technical analysis supports a bullish trend, though caution is advised due to potential overbought conditions. Valuation metrics are reasonable, and the company's confidence is reflected in its dividend policy. Despite this, areas requiring attention include cash flow challenges and specific regional revenue declines.

Positive Factors

Dividend Policy

The company announced its dividend policy, planning to distribute 30% of free cash flow annually, starting in 2026, which should bring extra shareholders’ returns.

Financial Performance

DLocal delivered strong net income and operating results.

Growth Opportunities

Management reiterated the attractive growth opportunity from digitalization of consumption in emerging markets, with potential to gain share of wallet and expand into new markets and products.

Negative Factors

Market Volatility

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

Profit Margins

The company lost volumes with a large merchant in Mexico, the Brazil business is under pressure, and the gross profit take rate contracted sequentially.

Revenue Growth

Potential risks related to margin compression and revenue growth deceleration are noted despite a solid business model.

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

Market Cap

$2.95B

Dividend YieldN/A

Average Volume (3M)952.42K

Price to Earnings (P/E)23.0

Beta (1Y)0.87

Revenue Growth33.84%

EPS Growth0.29%

CountryUS

Employees1,095

SectorTechnology

Sector Strength82

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.17

Shares Outstanding151,420,940

10 Day Avg. Volume823,040

30 Day Avg. Volume952,420

Financial Highlights & Ratios

PEG Ratio1.00

Price to Book (P/B)11.53

Price to Sales (P/S)0.00

P/FCF Ratio32.44

Enterprise Value/Market Cap1.40

Enterprise Value/Revenue1.44

Enterprise Value/Gross Profit14.07

Enterprise Value/Ebitda6.92

Forecast

1Y Price Target

$13.37

Price Target Upside28.68% 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: 7.00%|

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 demonstrates robust revenue growth and a strong gross profit margin, indicative of its competitive position in the software industry. The balance sheet is solid with low leverage, although there is a decline in return on equity. The cash flow has significant issues, with a notable drop in operating cash flow, necessitating attention to operational efficiency and cash management.

Income Statement

Very Positive

DLocal shows strong revenue growth, with a remarkable increase from $552.89 million in 2019 to $745.97 million in 2024. The gross profit margin remains robust, indicating effective cost management. However, the net profit margin has decreased from 22.9% in 2023 to 16.1% in 2024, suggesting higher operational costs or other expenses impacting net income.

Balance Sheet

Positive

The balance sheet reflects a solid equity base with an equity ratio of 41.7% in 2024, indicating good financial stability. The debt-to-equity ratio remains low, showcasing prudent leverage management. However, the return on equity declined from 32.7% in 2023 to 24.6% in 2024, signaling a dip in efficiency.

Cash Flow

Positive

The company experienced a significant drop in operating cash flow from $293.45 million in 2023 to -$32.78 million in 2024, impacting the free cash flow. The free cash flow to net income ratio is concerning as it turned negative, highlighting cash flow issues despite positive net income.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
745.97M	650.35M	418.93M	244.12M	104.14M
	Gross Profit
294.67M	276.86M	202.17M	130.44M	60.08M
	EBIT
140.50M	179.66M	127.91M	83.84M	30.95M
	EBITDA
168.91M	184.21M	153.10M	90.79M	32.48M
	Net Income Common Stockholders
120.42M	148.96M	108.68M	77.88M	28.18M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
554.49M	638.84M	469.39M	337.20M	52.00M
	Total Assets
1.17B	1.08B	826.30M	583.01M	200.47M
	Total Debt
54.45M	3.96M	4.08M	8.94M	218.00K
	Net Debt
-370.72M	-218.85M	-464.01M	-327.25M	-43.47M
	Total Liabilities
682.34M	629.31M	426.68M	302.71M	155.42M
	Stockholders Equity
488.89M	455.03M	399.63M	280.32M	45.05M
Cash Flow		Free Cash Flow
-34.49M	275.23M	142.10M	60.47M	84.60M
	Operating Cash Flow
-32.78M	293.45M	154.45M	108.49M	88.49M
	Investing Cash Flow
-17.75M	-84.67M	4.30M	-37.94M	3.65M
	Financing Cash Flow
-68.59M	-133.87M	-27.33M	153.75M	-15.20M

DLocal Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price10.39

Price Trends

50DMA

9.37

Positive

100DMA

10.00

Positive

200DMA

9.68

Positive

Market Momentum

MACD

0.24

Positive

RSI

51.57

Neutral

STOCH

33.78

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLO, the sentiment is Neutral. The current price of 10.39 is below the 20-day moving average (MA) of 10.74, above the 50-day MA of 9.37, and above the 200-day MA of 9.68, indicating a neutral trend. The MACD of 0.24 indicates Positive momentum. The RSI at 51.57 is Neutral, neither overbought nor oversold. The STOCH value of 33.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DLO.

DLocal Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DLO	82 Outperform	$2.95B	23.01	26.10%	―	33.84%	0.29%
PAYO	73 Outperform	$2.48B	23.28	15.97%	―	14.86%	-0.94%
PAGS	71 Outperform	$2.82B	6.96	14.36%	1.54%	2.38%	9.88%
TUYA	68 Neutral	$1.72B	80.54	1.98%	3.72%	27.63%	―
DOCN	66 Neutral	$2.69B	26.45	-41.63%	―	13.21%	109.61%
Sector *	62 Neutral	$11.92B	10.48	-7.50%	2.95%	7.40%	-8.18%
STNE	61 Neutral	$3.90B	8.73	-8.85%	―	-14.03%	-167.03%

* Technology Sector Average

Performance Comparison

DLO

DLocal

10.27

3.07

42.64%

PAGS

Pagseguro Digital

8.52

-2.76

-24.47%

STNE

Stoneco

13.94

1.80

14.83%

PAYO

Payoneer

6.90

1.43

26.14%

TUYA

Tuya

2.73

1.03

60.59%

DOCN

DigitalOcean Holdings

28.20

-6.83

-19.50%

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.