Dlocal reported yesterday; the ER call has not yet happened.
Only the PR is out yet: News & Events - Investor Relations - dLocal
Revenue beat handily vs the $173m consensus and their $178m guide and was up 59% yoy, an acceleration yoy and qoq. Latam was weak; down 3% sequentially / up 42% toy, while Africa & Asia more than doubled, up 103% sequentially and 121% yoy, resulting in a handy beat on the top line. But that Africa revenue looks very weird to me and impacted by currency weirdness in Nigeria which I don’t fully understand; hopefully they address that in the call.
| Revenue $m | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2020 | 31 | 35 | ||
| 2021 | 40 | 59 | 69 | 76 |
| 2022 | 87 | 101 | 112 | 118 |
| 2023 | 137 | 161 | 164 | 188 |
TPV was very strong, up 55% yoy.
However, all margins declined, which was the thing that stood out for me.
Margins were negatively impacted by “expatriation costs” and (negative) mix impact.
Gross margins went down to 37% from 45% prior q. And that is the number they have steered us to focus on: growing absolute GP $. Given that steer, the fact that was down sequentially to $70m from $75m last quarter was very disappointing. EBITDA was accordingly a big miss and the margin the lowest it’s ever been. Net profits $ and margin also declined sequentially:
| EBITDA % | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2020 | 42% | 40% | ||
| 2021 | 45% | 44% | 38% | 38% |
| 2022 | 38% | 38% | 38% | 34% |
| 2023 | 33% | 32% | 34% | 26% |
| NI % | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2020 | 28% | 33% | ||
| 2021 | 42% | 30% | 29% | 31% |
| 2022 | 30% | 30% | 29% | 16% |
| 2023 | 25% | 28% | 25% | 15% |
NRR came in very strong at 149%.
There were also a number of C level changes. The founder is moving from co-ceo to a Board role to make way for Pedro Arndt as CEO, and they brought in a new CFO.
All in all the I didn’t like the results despite the revenue growth. Such a sharp (unplanned) decline in margins and profits just doesn’t sit well with me despite the CEO promising that operational leverage will start kicking in “looking beyond 2024”. That’s probably too far for me.
-wsm