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    DLO
    Earnings call· Dec 2025(Q4 FY25)

    dLocal Q4 FY25 earnings call DLO

    Mar 18, 2026 Source

    Executive summary

    DLocal Q4 FY25 — Record TPV and Revenue, Strong Cash Generation, and New Share Buyback Program

    DLocal delivered a record Q4 FY25, driven by accelerating TPV and revenue growth across emerging markets, particularly in Brazil, Mexico, and South Africa. The company demonstrated strong cash generation and operating leverage, leading to significant net income growth. Management outlined a clear strategy for 2026, focusing on continued TPV growth, product innovation, and increased capital returns to shareholders through a new share repurchase program and consistent dividend policy.

    Highlights

    5

    • TPV reached a record $13 billion in Q4, growing 70% YoY and 26% QoQ, with full-year TPV reaching $41 billion, up 60% YoY.

    • Revenue reached an all-time high of $338 million in Q4, up 65% YoY, and crossed $1 billion for the full year.

    • Adjusted free cash flow for Q4 was $65 million, doubling YoY, with a full-year conversion ratio of nearly 100% of net income.

    • Net income totaled $56 million for Q4, up 87% YoY, and $197 million for the full year, up 63% YoY.

    • Board approved a new share repurchase program of up to $300 million, in addition to confirming a dividend policy of 30% of prior year's FCF ($57 million).

    Concerns

    3

    • Gross profit growth of 38% YoY in Q4 was lower than revenue growth, reflecting natural margin pressure from scaling volume and new payment methods.

    • Argentina's gross profit was held back by higher costs amid election-related FX and rate volatility in Q4, despite strong underlying volume growth.

    • Operating leverage acceleration is expected to become evident more towards the second half of 2026 due to annualized salary and wage spend from 2025 hirings.

    Guidance & targets

    5
    CategoryTargetConfidence
    Total Payment Volume (TPV) growth
    50% to 60% year-over-year
    high materiality
    High
    Gross profit growth
    22.5% to 27.5% year-over-year
    high materiality
    High
    Operating profit growth
    27.5% to 32.5% year-over-year
    high materiality
    High
    Dividend payout
    $57 million
    medium materiality
    High
    Share repurchase program
    up to $300 million
    high materiality
    High

    Operational metrics

    16
    Total Payment Volume (TPV)
    $13 billion70% year-on-year; 26% quarter-on-quarter
    Q4 FY25

    Highest quarterly volume in dLocal's history and fifth consecutive quarter of above 50% year-over-year TPV growth.

    Revenue
    $338 million65% year-on-year; 20% quarter-on-quarter
    Q4 FY25

    All-time high for the quarter, crossing $1 billion for the first time for the full year.

    Gross Profit
    $116 million38% year-on-year; 12% quarter-on-quarter
    Q4 FY25

    Reflects natural margin pressure dynamic of scaling volume with established merchants and into new payment methods, products and countries.

    Adjusted EBITDA
    $78 million38% year-on-year; 9% quarter-on-quarter
    Q4 FY25

    Expanded as a percentage of gross profit by 5 percentage points for the full year, underscoring operating leverage.

    Net Income
    $56 million87% year-on-year; 7% quarter-on-quarter
    Q4 FY25

    Year-over-year growth reflects a lower effective tax rate due to more favorable jurisdictional mix and nonrecurrence of a one-time tax settlement.

    Return on Equity (ROE)
    35%up 10 percentage points year-over-year
    LTM

    Reflects stronger profitability and effects of capital return policy, mostly inaugural dividend payment in 2025.

    Total Operating Expenses
    $53 million28% year-on-year
    Q4 FY25

    Driven primarily by investment cycle related headcount growth and higher average salaries following merit cycle.

    Licenses held
    37added 4 in 2025
    FY25

    Includes Argentina, Chile, UAE, Philippines added in 2025.

    License applications in process
    16
    FY25

    Part of strategy to operate on own licenses in a compliant way.

    Buy Now Pay Later (BNPL) Fuse product growth
    88%quarter-on-quarter
    Q4 FY25

    Clear signal that merchant and consumer appetite for installment-based payments is real and rapidly accelerating.

    Total Merchant Count
    760+
    FY25

    Diversity of the base continues to increase.

    AI-driven automation productivity equivalent
    7%
    FY25

    Delivered productivity equivalent of roughly 7% of total headcount, allowing to scale without proportional cost increases.

    Capital returned to shareholders
    64%
    since 2022

    Company intends to maintain this disciplined approach to capital returns going forward.

    Operating Profit
    —
    Starting 2026

    Introducing operating profit to provide investors with greater transparency into operating performance and a more standardized basis for comparison with industry peers.

    Headcount growth
    increased
    Q4 FY25

    Driven by investment cycle related headcount growth and higher average salaries, leading to higher OpEx in early 2026.

    Headcount additions
    not planning any significant additions
    2026

    Beyond a few hirings already mentioned at the end of '25, implying OpEx growth should normalize in latter part of 2026.

    Industry KPIs

    4
    MetricValueDetails
    Capital returns$57 million dividend; up to $300 million share repurchaseUSD
    Payments volume gdv$13 billionUSD
    Net revenue yield take rate—
    Switched processed transactions3.5 billion pay-in transactionstransactions

    Product announcements

    3
    ProductTypeDetails
    Buy Now Pay Later (Fuse product)launch
    Full-service stablecoin suitelaunch
    Card-present offeringsroadmap

    Deals & partnerships

    2
    GoogleCollaboration on the AP2 open standard for interoperable AI engine payments.

    Ensuring local payment methods across emerging markets are part of the AI infrastructure from the ground up.

    Circle, BVNK, Fireblocks, FelixPartnership for stablecoin solutions.

    Offering a complete infrastructure suite for digital assets from treasury and effects through on and off ramps all the way to stablecoin acceptance at checkout and settlements in stable.

    Risks & headwinds

    5
    Margin pressure from scaling volume and new productsQ4 FY25, ongoing

    Gross profit growth of 38% YoY in Q4 vs. revenue growth of 65% YoY.

    Mitigation: Management views this as a natural dynamic, focusing on TPV growth and gross profit dollar growth, believing monetization will follow.

    FX and rate volatility in ArgentinaQ4 FY25, potentially ongoing

    Gross profit in Argentina was held back by higher costs amid election-related FX and rate volatility.

    Mitigation: Management acknowledges volatility but views Argentina as a high-growth, high-return market, expecting long-term recovery.

    Operating expense growth due to prior hiringH1 FY26

    Total operating expenses up 28% YoY in Q4. Higher year-over-year OpEx growth expected in the first few months of 2026.

    Mitigation: No significant headcount additions planned for 2026; operating leverage acceleration expected in H2 2026 as costs annualize.

    Concentration in large merchant contractsFY26

    Guidance for 2026 remains concentrated in a merchant perspective, with delivery on net new adds in terms of markets and payment methods for large global contracts being a big part of growth.

    Mitigation: Focus on deepening relationships and expanding services (new markets, payment methods) with these critical partners. Diversification efforts are ongoing (top 10 merchants account for lower share of revenue).

    Emerging market macro volatilityFY26

    Emerging markets remain inherently volatile, and our projections reflect those uncertainties.

    Mitigation: Business built to navigate complexity; confidence in guidance despite uncertainties.

    What to watch in Q1 FY26

    5

    Operating leverage acceleration

    Second half of 2026
    CurrentOpEx up 28% YoY in Q4 FY25; higher YoY growth expected in H1 FY26.
    TargetOperating leverage acceleration to become evident.

    Why it matters

    Indicates the company's ability to scale efficiently and grow operating profit faster than gross profit.

    we expect operating leverage acceleration to become evident more towards the second half of the year and then flow into the following year.

    Q&A highlights

    5

    Asked for color on TPV growth drivers (country, vertical) for FY26 and if Argentina's Q4 gross margin pressure due to FX volatility is a one-off that should recover.

    Pedro stated FY26 TPV growth will be broad-based across Latin America, Africa (Egypt recovery), Middle East, and Asia, with increasing contributions from new country expansions with existing merchants and new merchant acquisitions. Guillermo confirmed Argentina's Q4 gross profit was impacted by FX/rate volatility but remains a high-growth, high-return market, implying potential for margin recovery as macro normalizes.

    “Latin America will continue to deliver strong growth. We consolidate our position further in Africa with some critical markets there, sustaining growth. We've seen Egypt pick back up in the fourth quarter, and we assume that, that rolls into the '26 guidance.”

    asked by Tito Labarta · answered by Pedro Arnt

    2 min read5 chapters

    Detailed Narrative

    01

    Exceptional Execution and Business Flywheel

    DLocal achieved record TPV of $41 billion (up 60% YoY) and revenue exceeding $1 billion in FY25, demonstrating strong execution. The business flywheel is accelerating, driven by high growth in emerging markets, strong customer loyalty (TPV retention 158%, net revenue retention 145%), and an asset-light, high cash conversion model. The company processed 3.5 billion pay-in transactions in 2025, equivalent to 6,700 payments per minute.

    02

    Innovation Engine and Product Expansion

    The company continues to advance its innovation engine with Buy Now Pay Later (BNPL) products live in 6 countries, growing 88% QoQ in Q4. A full-service stablecoin suite has been launched, enabling fiat to stablecoin on/off-ramps, settlements, and checkout collections. DLocal also expanded its APM portfolio and is collaborating with Google on the AP2 open standard for AI engine payments, ensuring local payment methods are integrated.

    03

    Strategic Market Expansion and Diversification

    DLocal now processes payments in 44 markets across the Global South, nearly doubling its footprint over the last 5 years. The company holds 37 licenses across 26 markets, adding 4 in 2025 (Argentina, Chile, UAE, Philippines) with 16 additional applications in process, including for the United States. Revenue concentration in the top 3 markets has declined, and the top 10 merchants account for a lower share of total revenue, indicating increasing diversification.

    04

    Operating Efficiency and Capital Allocation

    DLocal delivered best-in-class efficiency, with gross profit per employee improving due to AI and automation, which delivered productivity equivalent to 7% of total headcount in 2025. The company maintains a strong cash generation capacity, returning 64% of adjusted free cash flow generated since 2022 to shareholders. A new share repurchase program of up to $300 million and a confirmed dividend policy of $57 million for FY26 underscore its commitment to shareholder returns.

    05

    Long-Term Growth Vectors

    The company sees vast long-term opportunities, including continued growth from existing merchants in current markets, geographic expansion with existing merchants into new regions like Asia, the Middle East, and Africa, and increasing contributions from new merchants across priority verticals (travel, crypto, gaming, AI). Innovation in new products like BNPL, enhanced merchant of record solutions, virtual accounts, and soon-to-launch card-present offerings are expected to drive multibillion TPV opportunities.

    AI-generated summary of the company’s earnings call. Not investment advice.