dLocal moves money between large digital companies based in the United States, Europe and China and the emerging markets where their users, suppliers and contractors are. Pay-ins collect in local currency and settle with the merchant in dollars or euros; pay-outs run the other way. Revenue arises per authorised transaction, as a percentage of value or a fixed amount, with a foreign exchange fee when the payment crosses a currency border. Transaction revenues are $1,054.9 million, 96.5% of the total; other revenues, $38.7 million, gather pass-through transactional taxes, monthly minimums, transfer and setup fees.
The business in one page
There is one reportable segment, payment processing, and the segment note states that disaggregated information exists only at the revenue level, with no corresponding detail at any margin or profitability level. By region LatAm is 79.9% of revenue — Brazil 18.9%, Mexico 16.7%, Argentina 14.7% — and the rest of the world 20.1%, with Egypt down 36.4% to 5.5%. Processed volume is $40.8 billion, up 59.6%, against revenue up 46.6%: the gap is the take rate, down from 2.917% to 2.679%.
What we think matters
- Return on capital of 137.7%
- Growth entirely self-funded
- No financial fragility
- Unit price falling for two years
- Half the cash belongs to someone else
- Concentration that is worsening
How DLocal Limited makes money
Competitive advantage
The moat is the network of licences: more than forty countries, over seventy subsidiaries of which roughly three quarters are local collection entities, an Authorised Payment Institution licence in the United Kingdom from December 2024, electronic money and payment institution licences in the European Union and FinCEN registration.
The filing concedes the switching cost from the other side, listing among its risks that potential merchants have concerns about the disadvantages of changing payment processing vendor.
98.8% of processed volume comes from merchants active more than two years, and net revenue retention is 145%.
The same concentration is the weakness: the top ten merchants are 61% of revenue and two individually exceed 10%, each large enough to renegotiate.
Pricing power
No prices are published, but revenue and processed volume both are, so the effective price per dollar transacted is derivable: 3.679% in FY2023, 2.917% in FY2024, 2.679% in FY2025.
Gross profit per unit of volume fell faster, from 1.566% to 0.987%, because processing cost does not compress at the same speed as price.
The filing gives a contractual cause rather than a transitory one: tiered pricing means revenue may grow less than volume as a global merchant's volume increases.
On the cost side it states it cannot predict whether financial institutions will raise or cut their fees, and is not always able or willing to pass the change on.
Growth transparency
FY2025 growth is entirely organic: no acquisition net of cash acquired in the cash flow statement, no goodwill in either balance-sheet year.
The only perimeter changes declared are a United States subsidiary the group says is not a business combination under IFRS 3, and the dissolution of a Costa Rican company.
Earlier deals exist but fall outside the three comparative years: PrimeiroPay in the first half of 2021, and $41.3 million of gross cost of acquired intangibles.
One figure does not reconcile: the narrative puts new-merchant revenue at 2% or $17 million, the table at $12.7 million or 1.2%, and only the table sums to the total.
Scalability
All the scale sits above the cost of services line: operating expenses grew 18.5% against revenue at 46.6%, from 19.9% to 16.1% of revenue.
Below the line the direction reverses: cost of services grew 53.1%, faster than revenue for a second year, and gross margin fell from 42.6% to 39.5% to 36.8%.
Processing costs are $655.0 million of $690.8 million of cost of services, 94.8%, and grew 53.4%: every extra transaction carries a local financial institution's fee.
Capital intensity stays at 3.4% of revenue, and revenue per employee rose from $681.3 thousand to $858.4 thousand.
Catalysts identified in the filing
- A new $300 million repurchase programme
Authorised on 13 March 2026 and expiring 19 March 2027, worth 7.2% of market capitalisation at the year-end price and fully covered by corporate liquidity of $424.5 million. The previous programme went unused for a year, so authorisation is not execution.
- The first acquisition of the period, in Africa
On 27 February 2026 the group acquired 100% of Mint Code Solutions in Cameroon and certain assets from NeWurth for $23.0 million, settled with one dollar in cash and the release of a working capital facility. Purchase price allocation is in progress, with intangibles expected for customer contracts, platform, intellectual property and licences.
- Residual operating leverage on overhead
Operating expenses fell from 19.9% to 16.1% of revenue in one year. If that compression continued even partially while volumes grow, operating profit would keep growing faster than revenue even with the take rate falling.
- The United Kingdom licence obtained in December 2024
Authorisation as an Authorised Payment Institution, which the document calls a significant advancement of the group's regulatory framework. The document does not describe its commercial effects and they cannot be quantified from the filing.
- A dividend tied to a conservative measure
The declared policy is 30% of the prior year's Adjusted Free Cash Flow: $57.2 million declared on 13 March 2026 on the FY2025 result. The $150.0 million paid during 2025 was 5.5 times what the policy implied, so it is not a basis for a forward yield.
Financial analysis
Figures for 3 fiscal years, taken from the Key Metrics tables of each annual report. When a later filing restates a figure, we use the figure reported for that year's own filing.
Key metrics
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | $0.65B | $0.75B | $1.09B |
| Gross margin | 42.6% | 39.5% | 36.8% |
| Operating margin | 27.6% | 18.8% | 20.1% |
| Net margin (GAAP) | 22.9% | 16.1% | 18.0% |
| Operating cash flow | $0.29B | -$0.03B | $0.42B |
| Capex | $0.02B | $0.02B | $0.04B |
| Free cash flow | $0.20B | $0.09B | $0.19B |
| Stock-based compensation | $0.01B | $0.02B | $0.02B |
| Dividends + buybacks | $0.10B | $0.10B | $0.15B |
| Net cash | – | $0.26B | $0.43B |
| Total debt | – | $0.06B | $0.09B |
| Shareholders’ equity | – | $0.49B | $0.57B |
| Effective tax rate | 16.5% | 20.2% | 13.9% |
| ROIC (effective tax) | – | 49.1% | 137.7% |
Key risks
The main weaknesses and risks identified in the latest annual report, in the order the report presents them.
- Unit price falling for two years
The take rate went from 3.679% to 2.917% to 2.679%, and gross profit per unit of volume from 1.566% to 0.987%. The filing states the cause: tiered pricing in the contracts with global merchants means revenue grows less than their volume. It also says it cannot predict the fees financial institutions charge it, nor always pass them on.
- Half the cash belongs to someone else
Operating cash flow less capex is $378.7 million, of which $188.0 million is the increase in merchant funds held. The company's Adjusted Free Cash Flow of $190.7 million removes exactly that, and FY2024 shows why: IFRS operating cash was negative $32.8 million in a year that produced $90.6 million of real cash.
- Concentration that is worsening
The top ten merchants are 61% of revenue and two of them individually exceed 10%, against one in FY2024 and none in FY2023. Agreements are open-ended and terminable by either party without penalty once notice has lapsed, and all new merchants together brought $12.7 million of revenue.
- Receivable coverage inconsistent with the rates disclosed
The allowance is $0.9 million on gross trade receivables of $521.7 million, 0.16%. Applying the expected loss rates Note 30 gives for each rating class to the amounts in the same note produces $25.0 million, twenty-nine times the figure recorded; the CCC class holds $112.8 million against $13.0 million a year earlier.
- Disclosure below what the model warrants
Volume is never split between pay-ins and pay-outs or between cross-border and local, there are no margins by region or product, the number of transactions is not given, and Egyptian revenue falls 36.4% without a line of comment. The document also contradicts itself on new-merchant revenue, $17 million in the narrative against $12.7 million in the table that sums to the total.
Open questions the filing does not answer
- Why did Egyptian revenue fall 36.4%, from $94.0 million to $59.7 million, and is the decline one of price, of volume, or the loss of a customer?
- What took costs with related-party collection entities from $0.9 million to $27.9 million in a year, and who are those counterparties?
- Do the $20.7 million of borrowing costs sit inside cost of services, as Note 22 says, or inside finance costs, as Note 11 says?
- Why did the $200 million repurchase programme go entirely unused in a year closed with $424.5 million of corporate liquidity?
- What expected loss rates are actually applied to receivables, if those in Note 30 imply an allowance twenty-nine times the one recorded?
- What share of processed volume is pay-in and what share pay-out, and at what take rate each? The document defines the categories without quantifying them.
- Is the board of nine or of eleven members? The document states both, and the compensation committee is dated December 2025 in one place and 2026 in another.
At $14.14 and 294,931,956 shares the market valued dLocal at $4,170.3 million, 21.2 times FY2025 net profit and 21.9 times Adjusted Free Cash Flow, a cash yield of 4.57%. Enterprise value of $3,738.5 million is 13.4 times Adjusted EBITDA and 17.0 times operating profit, an operating return of 5.88%.
FY2025 is a strong year: revenue up 46.6% to $1.09 billion, operating profit up 56.5%, net profit up 63.4%, and return on invested capital of 137.7% on $137.6 million of capital employed, because the model works on merchants' money rather than its own. There is no medium-term debt, no covenant disclosed, no asset valued on internal level 3 estimates, and $431.9 million of the company's own net liquidity. Operating expenses grew 18.5% against revenue at 46.6%, and their share of revenue fell from 19.9% to 16.1%.
Three things qualify it. The take rate fell from 3.679% to 2.679% in two years and gross profit per unit of volume from 1.566% to 0.987%, and the cause is contractual: tiered pricing means a customer's growth cuts the price. Of $378.7 million of apparent free cash flow, $188.0 million is the increase in merchant funds held, which is why the company's own measure of $190.7 million is the right one. And net profit growth of 63.4% owes twelve points to tax: at the FY2024 effective rate the year would have closed at $182.4 million.
Strengths
- Return on capital of 137.7%
NOPAT of $189.4 million on invested capital of $137.6 million, against 49.1% in FY2024. The business needs almost no shareholders' capital because it operates on merchants' money: fixed assets of every kind are $81.0 million, 5.3% of the balance sheet.
- Growth entirely self-funded
Over the three years the company produced $485.2 million of Adjusted Free Cash Flow and returned $349.0 million in dividends and repurchases, without raising equity. Growth in FY2025 is wholly organic: no acquisition, no goodwill in either balance-sheet year.
- No financial fragility
No medium-term debt, no covenant disclosed, financial liabilities maturing within three months, and $431.9 million of net corporate liquidity. Gross debt is 0.33 times Adjusted EBITDA and the only borrowing is a peso facility used to advance funds to merchants.
- Customers that stay
Net revenue retention is 145%, from 113%, and 98.8% of processed volume comes from merchants on the platform for more than two years. Existing merchants account for $1,080.9 million of $1,093.6 million of revenue.
- Real operating leverage on overhead
Operating expenses grew 18.5% against revenue at 46.6%, taking their share of revenue from 19.9% to 16.1%. It is this, not gross margin, that produced the 56.5% rise in operating profit.
Last year’s watch-list, checked against this filing
| What we flagged | What happened | Result |
|---|---|---|
| $200 million repurchase programme authorised May 2024, running to 31 May 2025 | $101.1 million repurchased in 2024, nothing in 2025 | LAPSED - $98.9 million unused at expiry |
| $100 million repurchase programme of December 2022, up to July 2023 | Concluded 30 June 2023 with the full $100 million repurchased | DONE - completed ahead of the stated limit |
| Dividend policy: 30% of the prior year's Adjusted Free Cash Flow | $150.0 million paid in 2025 against the $27.2 million the policy implied | EXCEEDED - by $122.8 million, 5.5 times the formula |
| The same policy applied to the FY2025 result | $57.2 million declared on 13 March 2026, exactly 30% of $190.7 million | ON POLICY - back to the formula |
| Uruguayan tax matter, $4.5 million accrued in December 2024 | Paid during 2025 with no further tax impact | CLOSED - settled as accrued |
| Minimum capital requirements of the licensed subsidiaries | Three thresholds, stated in euro, dollars and reais, declared met in both years | MET - no shortfall disclosed |
| Margin, capital expenditure or volume targets | Not present: the trend information section flags no quantified expectation beyond 31 December 2025 | NONE STATED - comparison not possible |
What to watch in the next filing
- Take rate, revenue over processed volume. Below 2.40%, from 2.679%, and price compression is outrunning volume growth.
- Gross profit per unit of volume. Below 0.85%, from 0.987%, and scale is no longer converting into profit.
- Share of the top ten merchants. Above 65%, from 61%, and dependence passes the level the filing itself flags as a risk.
- Days of processed volume in payables to merchants. Below 6.0 days, from 7.27, and the float is unwinding.
- Allowance as a share of gross trade receivables. Above 1.0%, from 0.16%, and the credit risk implied by the Note 30 rates is being recognised.
Research on DLocal Limited
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