DLocal $DLO 3Q21 Earnings 🚀
- TPV $1.8b +217% 🚀
- TPV ratio/take-rate 3.8% -30bps QoQ ↘️
- Rev $69m +123% 🚀
- Adj EBITDA $26m +110% 🚀 margin 38% ⭐️ -211bps ↘️
- NG Net Income $20m +129% 🚀 margin 29% ⭐️ +89bps ↗️
- High Net Retention 185% ⭐️
1 | Strong Q3
“We continue to see strong growth across multiple verticals as we see local economies continue to bounce back and global merchants prioritize their efforts in emerging markets.”
2 | $DLO solving the problem of EM payments complexity
3 | Dlocal ➡️ many clients across increasing multiple countries and payment methods
- 2Q21: 7 countries, 69 pymt methods ↗️
- 2Q21: 7 countries, 62 pymt methods ↗️
- 1Q21: 6 countries, 53 pymt methods ↗️
4 | Existing clients drive growth.
“…to solve their existing needs and cross-sell new payment methods, new countries, and new productive cases.
At any given time…have
- >50 pricing proposals ✅
- 40+ agreement ✅
- 30+ in testing stage ✅
- 20+ waiting to go live ✅
5 | New clients feed the sales funnel.
At a given time, we have about:
- 175+ in the early stages ✅
- 75+ plus waiting to go live ✅
➡️ Once live, typically takes 3-6 quarters to ramp up volume with the merchant.
➡️ Onboarded 10 plus new merchants this quarter.”
6 | Together Existing and New Merchants currently drive high NRR of 185% and low to zero Churn.
“…our net revenue retention is driven by having minimal levels of churns of less than 1%…”
7 | Net Retention - 150-160% (ST 12-18mths), 120-130% (LT)
“…we still think that in the near term, which is 12 to 18 months, 150%-160% net retention rate is achievable and that's what we are planning for.
…guided…long term, it will probably come down to 120%-130%.”
8 | Countries - Adding Thailand & El Salvador
9 | Lower Take Rates
…3.8% versus 4.1%…large merchants with a take rate lower than average have grown significantly.
…great for our business as they bring incremental EBITDA.
➡️ Not optimizing for take-rate
➡️ Take rate will fluctuate
➡️ Optimise not margins but profits
10 | EBITDA Margins - Range 40%+/- not specific number
“..expect the margin to be in and around that level…not tying ourselves to a specific number, it's a range…
…don't want to say is that it's definitely going to be a 40% number. It's going to be in that range…”
11 | Declining Customer Concentration Risk to Top 10 ✅
“…our revenues exposure to our top 10 merchants continuous decreasing from 62% in the 2Q21 to 57% in 3Q21.”
12 | Declining Cost of Services
“3Q20 was 2.4% of TPV… 3Q21 was 1.9%…decrease is the result of efficiencies & changes in biz mix.”
…transaction costs have continuously declined…might see them going up… function of processing payments in countries or payment methods…”
12 | Focus is on Net Retention and Absolute Profits
So, we continue to optimize for NRR, making sure that we are bringing more additional dollars that come at a profit. And yes, definitely, we are constantly getting better rate from acquirers, from payment methods, from banks.
Final Takeaway on dLocal $DLO:
➡️ Strong results, thesis unchanged. Rare combination of rapid growth & very strong profitability at scale (API), high insider ownership (>40%), well-diversified, deep integration (sticky & high switching cost), solid up+cross-sell.
Attached my earlier update on Dlocal’s $DLO 2Q21 earnings 👇🏻
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