# DLO — DLocal Limited

## Company & Research Metadata

- **Company:** DLocal Limited
- **Ticker:** DLO
- **Exchange:** NYSE
- **Sector / Industry:** Financials / emerging-market payment infrastructure
- **Template version:** 2.7
- **Research date:** 2026-10-21
- **Valuation / score price snapshot:** $13.18 — 2026-11-03 regular-session close, America/New_York
- **Tracking tier:** Primary Watchlist
- **Owned:** Yes
- **Primary operating period reviewed:** Q2 2026
- **Historical period reviewed:** completed FY2024-FY2025; Q1 FY2026, Q2 FY2026, H1 FY2026
- **Latest investor presentation reviewed:** Results release and associated financial tables; no separate slide deck materially used
- **Latest earnings call reviewed:** Q2 2026, complete material Q&A
- **Latest post-earnings management commentary reviewed:** No separate later management presentation incorporated

- **Price snapshot date:** 2026-11-03

- **Price snapshot time / timezone:** Regular-session close, America/New_York (including exchange half-days)
- **Competitor / analyst-Q&A audit:** 2026-10-28; original operating, price and valuation snapshots retained.

## What's Changed Since Previous Review

**Current Review:** 2026-10-28

**Previous Review:** 2026-10-21

**Update Trigger:** Competitor relevance and analyst-Q&A correction

| Area | Previous View | Current View | Investment Impact |
|---|---|---|---|
| Competition | Preceding operating and comparable-company classifications | Product/customer/geographic boundaries corrected; direct rivals separated from substitutes, partners and valuation anchors | Corrects the competitive comparison; does not by itself re-underwrite the valuation |
| Analyst questions | Prior source-linked Q&A summaries | Complete questions and sentence-form management answers; all 6 existing rows retained | Improves readability while preserving the recorded exchange meaning |
| Valuation and scores | Approved operating/price snapshots, scenarios, scores and decisions | Preserved | No price refresh, rerank or change to valuation assumptions in this correction pass |

**Thesis:** No new fundamental thesis determination is made in this correction pass. The prior investment decision is preserved; the corrected competitive scope should govern the next substantive review.

## Investment Snapshot

| Metric | Current View |
|---|---|
| Price Snapshot | $13.18 — 2026-11-03 regular-session close, America/New_York |
| Rating / Zone Status | Buy |
| Bear / Base / Bull Fair Value | $6.44 / $20.25 / $40.50 |
| Scenario Probabilities | 25% / 50% / 25% |
| Probability-Weighted Fair Value | $21.86 |
| Probability-Weighted Expected Return | +65.9% |
| Bear-Case Return | -51.1% |
| Strong Buy Zone | ≤ $7.08 |
| Buy Zone | >$7.08–$17.49 |
| Avoid Chasing Above | > $24.29 |
| Quality Score / Tier | 74.2 / Tier B |
| Opportunity Score / Rank | 64.8 / #17 of 76 |
| Risk Level | Medium-High |
| Tracking / Ownership | Primary Watchlist / Owned |

**Decision rationale:** DLO is **Buy** at $15.18, with +44.0% probability-weighted upside and -57.6% bear-case return. A single integration into difficult local markets can generate attractive merchant value and operating leverage. Confidence is 50/100 because the earnings conversion, competitive and capital assumptions below remain conditional.

## Investment Thesis

A single integration into difficult local markets can generate attractive merchant value and operating leverage. Q2 TPV grew 92%, but revenue grew 56% and gross profit per TPV fell to 0.72%. The central debate is whether rapid lower-take-rate volume growth still produces durable gross-profit and owner-earnings growth. The business should be valued on that economic output rather than TPV alone.

### What the Market May Be Mispricing

| Debate | Research judgment |
|---|---|
| Gross-profit growth relative to TPV growth | A single integration into difficult local markets can generate attractive merchant value and operating leverage. |
| Merchant concentration, FX and country risk | Integration depth and local payment coverage support repeat merchant volume. |
| Corporate cash conversion and dilution | Q2 revenue was $399.7 million and adjusted FCF $68.5 million. |

## Business Overview

dLocal connects global merchants with payment methods, acquiring networks and payout infrastructure in emerging markets. Merchants can accept local payments or pay local recipients through one integration. The platform earns transaction and foreign-exchange fees, with economics varying by country, payment method and cross-border versus local-to-local mix. Large global merchants supply scale but also negotiate aggressively and can shift volume among providers.

### Business Takeaway

dLocal connects global merchants with payment methods, acquiring networks and payout infrastructure in emerging markets. Integration depth and local payment coverage support repeat merchant volume.

## Industry, TAM & Market Share

Digital payments and global merchant expansion support a runway across Latin America, Africa and Asia. Local regulation, currency controls, licensing and financial-system complexity both create demand and raise operating risk. Global payment volume is not a directly monetizable TAM at today's take rate.

### Market-Share Analysis

Comparable same-definition share data for the subject and its principal rivals were not established. TAM estimates and company-specific volume measures are not treated as directly comparable market shares. The positioning analysis below is more reliable than a table of unmatched percentages.

#### Competitive Scale / Position

| Company / Platform | Primary Position | Relative Scale | Growth Direction | Investment Relevance |
|---|---|---|---|---|
| EBANX (private) | Direct: local payment collection for global merchants in emerging markets | Product scope; no matched operating-scale series | Competes for cross-border merchant payment flows | Customer choice in the stated segment only |
| Adyen | Segment-specific: enterprise acquiring and local payment methods | Product scope; no matched operating-scale series | Overlap depends on country and payment rail | Customer choice in the stated segment only |
| Merchant in-house integrations | Substitute: direct local acquiring and payout connections | Product scope; no matched operating-scale series | Economic alternative for sufficiently large merchants | Customer choice in the stated segment only |

### Industry Takeaway

Global payment volume is not a directly monetizable TAM at today's take rate. The base case requires evidence of profitable adoption within that market.

## Customer Economics

Integration depth and local payment coverage support repeat merchant volume. Incremental margins depend on merchant concentration, transaction mix, FX spreads and processing costs. Lower gross profit per TPV is acceptable only if retained merchants and operating efficiency produce rising absolute owner earnings. Brazil and Mexico local-to-local growth should be distinguished from higher-spread cross-border flows.

### Customer-Economics Takeaway

The economic test is Corporate cash conversion and dilution. Brazil and Mexico local-to-local growth should be distinguished from higher-spread cross-border flows.

## Competitive Landscape & Moat

### Competitive Landscape

The shared customer is a global merchant accepting or paying out local funds. Stone’s domestic SMB acquiring and PayPal’s consolidated wallet business do not provide a like-for-like operating comparison.

| Competitor | Market Share | Positioning | Advantages vs. Company | Disadvantages vs. Company | Current Direction |
|---|---|---|---|---|---|
| EBANX (private) | No consistent comparable series | Direct: local payment collection for global merchants in emerging markets | Local payment-method and settlement infrastructure | Market coverage and merchant mix differ | Competes for cross-border merchant payment flows |
| Adyen | No consistent comparable series | Segment-specific: enterprise acquiring and local payment methods | Unified global acquiring platform | Not exclusively an emerging-market collection model | Overlap depends on country and payment rail |
| Merchant in-house integrations | No consistent comparable series | Substitute: direct local acquiring and payout connections | Merchants control routing and retain provider fees | Requires local integration, compliance and operations | Economic alternative for sufficiently large merchants |

### Moat Assessment

Local integrations, compliance infrastructure and execution history create a moderate moat. Large processors can invest in similar coverage, and merchants often keep multiple providers. Pricing power is therefore limited at the largest accounts despite the complexity of market entry.

**Moat direction:** Stable — an analytical judgment about product and distribution economics, not a measured market-share claim.

### Competitive Takeaway

Local integrations, compliance infrastructure and execution history create a moderate moat. The direct rivals determine commercial pressure; diversified or sector anchors provide valuation context and are not substitutes for direct competition.

## Financial Profile

### Historical Financials

**Standardized period history (reviewed 2026-11-07):** Completed issuer fiscal years only, plus actually disclosed standalone quarters and cumulative YTD for the latest open FY. Currency USD, flows in millions, with fiscal dates defined by the issuer. Values marked derived come from disclosed period differences/sums, not TTM. Missing = N/D (not zero). FCF is statutory CFO less capex including intangibles. Do not confuse it with management's adjusted FCF: Q2 adjusted FCF was $68.548M, whereas unadjusted FCF here is $130.612M. Q1 derived from H1 minus Q2.

| Period | Revenue | Growth | Gross Margin | Operating Margin | FCF | FCF Margin | SBC | Diluted Shares | Cash | Debt |
|---|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:|
| FY2024 | 745.97 | 14.70% | 39.50% | 18.83% | -34.49 | -4.62% | 23.78 | 305 | 566.11 | 54.46 |
| FY2025 | 1,094 | 46.60% | 36.83% | 20.11% | 413.18 | 37.78% | 24.14 | 302 | 843.5 | 90.28 |
| Q1 FY2026 | $335.862M (derived from disclosed periods) | N/D | 35.3% | 15.7% | $83.043M (derived from disclosed periods) | 24.7% | $6.066M (derived from disclosed periods) | N/D | N/D | N/D |
| Q2 FY2026 | $399.664M | N/D | 31.8% | 16.1% | $130.612M | 32.7% | $6.489M | N/D | N/D | N/D |
| H1 FY2026 | $735.526M | N/D | 33.4% | 15.9% | $213.655M | 29.0% | $12.555M | N/D | N/D | N/D |

### Financial Takeaways

Q2 revenue was $399.7 million and adjusted FCF $68.5 million. Of $794.9 million total cash, only $369.1 million was identified as corporate cash. Customer settlement balances are not surplus shareholder cash. Standardized FCF is affected by settlement and working-capital flows; management's adjusted cash conversion and balance reconciliation are more useful than capitalizing the full reported cash-flow number.

Customer settlement assets are not excess corporate cash. Q2 corporate cash was $370.1 million versus $794.9 million total cash. Provider EV and standardized cash flow can therefore overstate owner liquidity; earnings and gross-profit conversion are the primary anchors.

**Financial direction:** Improving — assess the reported trend alongside dilution and the balance sheet.

## Management & Capital Allocation

Pedro Arnt brings substantial regional payments and finance experience. The priorities should be merchant diversification, transparent settlement cash accounting and disciplined country expansion. Governance and related-party history warrant continued scrutiny even when operating results improve.

### Management Takeaway

Governance and related-party history warrant continued scrutiny even when operating results improve.

## Valuation

### Current Valuation

| Metric | Value |
|---|---|
| Price Snapshot | $13.18 — 2026-11-03 regular-session close, America/New_York |
| Market Capitalization | $4.38B |
| Enterprise Value | N/A — not used; see capital/settlement accounting discussion |
| Trailing P/E | 22.32 |
| Provider forward P/E | 14.78 |
| EV / Sales | N/A — unadjusted metric excluded |

### Comparable Company Analysis

| Company | Relevance | Public / Private | Forward P/E | EV / Sales | Growth / Margin / Risk Context |
|---|---|---|---|---|---|
| DLO — DLocal Limited | Subject company | Public | 14.78 | N/A — financial / share-class mismatch | emerging-market payment infrastructure; 3Y revenue-growth estimate 32.47%; operating margin 17.35% |
| EBANX | Direct operating competitor / substitute | Private | N/A | N/A | emerging-market cross-border payment collection; no compatible standalone public multiple used |
| Adyen | Segment-specific: enterprise acquiring and local payment methods | Public | N/D — no matched snapshot collected | N/D — no matched snapshot collected | Overlap depends on country and payment rail |
| Merchant in-house integrations | Substitute: direct local acquiring and payout connections | Operating alternative / no standalone security | N/D — no matched snapshot collected | N/D — no matched snapshot collected | Economic alternative for sufficiently large merchants |

**Comparable takeaway:** The shared customer is a global merchant accepting or paying out local funds. Stone’s domestic SMB acquiring and PayPal’s consolidated wallet business do not provide a like-for-like operating comparison. Quoted multiples retain their original dated snapshot; missing matched multiples are not estimated. Consolidated parent multiples do not isolate the competing product. No mechanical peer average is used.

The base terminal P/E is 22×, versus the provider's current forward P/E of 14.78×. Holding that quoted multiple constant on this model's 2029 EPS gives an illustrative present value of **$13.61**, versus the central base FV of **$20.25**. Earnings definitions differ, so this is a sensitivity check; it makes the dependence on a rerating or derating explicit.

### Valuation Scenarios

| Scenario | Key Assumptions | Fair Value | Probability | Probability Rationale | Return From Price Snapshot |
|---|---|---|---|---|---|
| Bear | 3Y revenue CAGR 15%; sustainable 2029 EPS $0.70 after compensation; 14× P/E; 15% discount rate; Take-rate compression and competitive pressure leave 2029 sustainable EPS at $0.70. | $6.44 | 25% | Execution, financing or competitive setbacks remain credible | -51.1% |
| Base | 3Y revenue CAGR 28%; sustainable 2029 EPS $1.40 after compensation; 22× P/E; 15% discount rate; Volume growth and operating leverage support $1.40 of 2029 sustainable EPS. | $20.25 | 50% | Most likely operating trajectory, requiring measurable progress | +53.6% |
| Bull | 3Y revenue CAGR 40%; sustainable 2029 EPS $2.20 after compensation; 28× P/E; 15% discount rate; Broader merchant adoption and resilient gross-profit economics produce $2.20 of 2029 sustainable EPS. | $40.50 | 25% | Successful product conversion and operating leverage; not assured | +207.3% |
| **Probability-Weighted** | Sum of each scenario value × its probability | $21.86 | **100%** | Judgmental scenario probabilities | +65.9% |

### Valuation Takeaway

- **Primary valuation method:** Present value of sustainable 2029 equity earnings × scenario P/E, plus assumed interim dividends. The three-year discount horizon approximates late-2029 earning power.
- **Cross-check methods:** Direct competition, quoted peer multiples, current cash conversion, and the separate revenue/share/net-margin bridge in [the valuation workpaper](../valuation/watchlist_models_2026-10-21.md).
- **Key valuation dependencies:** Gross-profit growth relative to TPV growth; Merchant concentration, FX and country risk; Corporate cash conversion and dilution. All forward figures are independent research assumptions, not company guidance or consensus.
- **Valuation confidence / Risk Level:** 50/100 / Medium-High. Scenario values are sensitive to sustainable earnings and terminal multiples.
- **Margin-of-safety conclusion:** Buy at $15.18. New-file boundaries use Strong Buy = min(P/W FV ÷ 1.5, 1.1 × bear FV), Buy upper = P/W FV ÷ 1.25, Avoid above = P/W FV ÷ 0.90. Returns are to present fair value, not annualized returns or price targets for a particular date.

## Analyst Questions

The table consolidates related questions and follow-ups from each material participant in the complete call.

| Analyst / Firm | Core Question | Management Response | Research Read-Through |
|---|---|---|---|
| Tito Labarta / Goldman Sachs | How does volume growth affect the blended take rate and profit? | Management said large merchants can dilute the take rate while adding profit. | Stress monetization if competition or mix reduces economic yield. |
| James Friedman / Susquehanna International Group | How should investors interpret profit guidance and foreign-exchange effects? | Management said one-off items complicate sequential comparisons. | Require durable cash conversion after compensation and ongoing investment. |
| Guilherme Grespan / JPMorgan | How will second-half costs be managed? | Management emphasized maintaining cost discipline. | Require durable cash conversion after compensation and ongoing investment. |
| Pedro Leduc / Itaú BBA | Can the fourth-quarter margin level be sustained in 2027? | Management cautioned against extrapolating fourth-quarter margins. | Require durable cash conversion after compensation and ongoing investment. |
| Matthew Coad / Truist | How are pricing and currency spreads being managed in Mexico? | Management said pricing and costs are actively managed. | Confirm that this opportunity converts into profitable recurring demand. |
| Neha Agarwala / HSBC | Can a shift toward lower-take-rate volume still increase profits? | Management said lower-take-rate volume can remain accretive to profit. | Stress monetization if competition or mix reduces economic yield. |

### Analyst-Q&A Takeaway

Large merchants can generate lower blended take rates with higher gross profit. Management cautioned against extrapolating peak quarterly margins, making cash conversion and incremental profit more useful than volume alone.

## Thesis Monitoring

| Driver | Current State | Positive Trigger / Catalyst | Negative Trigger / Falsifier | What It Changes |
|---|---|---|---|---|
| Gross-profit growth relative to TPV growth | A single integration into difficult local markets can generate attractive merchant value and operating leverage. | Revenue trajectory sustains approximately 28% annual growth on a comparable basis | Growth remains below the 15% bear assumption over a full operating cycle | Revenue outlook and scenario probabilities |
| Merchant concentration, FX and country risk | Integration depth and local payment coverage support repeat merchant volume. | After-cost earnings progress toward the base implied net margin of 14.5% | Competition, credit losses or service costs make that margin trajectory unattainable | Margins, moat score and valuation multiple |
| Corporate cash conversion and dilution | Q2 revenue was $399.7 million and adjusted FCF $68.5 million. | Financing and compensation remain consistent with 295.4M economic shares in the 2029 base case | Required capital or cumulative dilution materially exceeds the model without matching earnings | Financial score, confidence and downside value |

## Quality & Opportunity Scorecards

### Quality Score

| Component | Score | Weight | Weighted Contribution | Evidence |
|---|---|---|---|---|
| Business durability and economics | 75 | 25% | 18.8 | Integration depth and local payment coverage support repeat merchant volume. |
| Moat and competitive position | 73 | 25% | 18.3 | Local integrations, compliance infrastructure and execution history create a moderate moat. |
| Growth runway and durability | 84 | 20% | 16.8 | Digital payments and global merchant expansion support a runway across Latin America, Africa and Asia. |
| Financial quality and balance sheet | 72 | 15% | 10.8 | Q2 revenue was $399.7 million and adjusted FCF $68.5 million. |
| Management, governance and capital allocation | 64 | 15% | 9.6 | Pedro Arnt brings substantial regional payments and finance experience. |
| **Quality Score** | **74.2** | **100%** | **74.2** | Weighted score, independent of ownership and current price |

- **Quality Tier:** B
- **Speculative override:** None

### Opportunity Score

| Component | Raw Input | Normalized Score | Weight | Weighted Contribution |
|---|---|---|---|---|
| Quality | 74.2 | 74.2 | 30% | 22.3 |
| Probability-weighted upside | +65.9% | 100.0 | 35% | 35.0 |
| Bear-case downside | -51.1% | 0.0 | 20% | 0.0 |
| Risk / valuation confidence | 50 | 50.0 | 15% | 7.5 |
| **Opportunity Score** |  | **64.8** | **100%** | **64.8** |

- **Opportunity Rank:** #17 of 76
- **Zone Status:** Buy

## Portfolio Context

- **Tracking tier:** Primary Watchlist
- **Owned:** Yes
- **Tracking source of truth:** `my_watchlist.md`
- **Portfolio source of truth:** `portfolio/holdings.md`
- **Scoring independence:** Ownership, account, shares, position size and cost basis do not change research, valuation, Quality, Opportunity, rank or zones.

## Investment Decision History

| Timestamp | Price | Rating | Zone Status | Buy Zone | Strong Buy Zone | Avoid Chasing Above | Base FV | P/W FV | P/W Return | Quality | Opportunity / Rank | Change / Rationale |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026-10-21 (America/New_York) | $15.18 | Buy | Buy | >$7.08–$17.49 | ≤ $7.08 | > $24.29 | $20.25 | $21.86 | +44.0% | 74.2 | 64.8 / #14 | Initial missing-file analysis; common-universe ranking; independent scenario assumptions |

---

## Material Sources

| Source | Type | Date / Period | What It Supports |
|---|---|---|---|
| [dLocal Reports Second Quarter 2026 Financial Results / DLocal Limited](https://dlocal.gcs-web.com/news-releases/news-release-details/dlocal-reports-second-quarter-2026-financial-results) | Company IR / earnings filing | Q2 2026 | Latest operating results, guidance, products and financial supplement |
| [DLO complete earnings-call transcript](https://www.fool.com/earnings/call-transcripts/2026/08/20/dlocal-dlo-q2-2026-earnings-call-transcript/) | Transcript | Q2 2026 | Prepared remarks and all material Q&A exchanges |
| [DLO regular-session historical price](https://stockanalysis.com/stocks/dlo/history/) | Market data | 2026-10-20 close | Common price used in returns, scores and zones |
| [DLO valuation statistics](https://stockanalysis.com/stocks/dlo/statistics/) | Market data | 2026-10-20 close; ratios retrieved 2026-10-21 | Market capitalization, shares, quoted multiples and current ratios |
| [DLO historical income statement](https://stockanalysis.com/stocks/dlo/financials/income-statement/) | Standardized financial statements | Latest reported period and two preceding fiscal years | Historical income statement; source-native currency and definitions |
| [DLO historical balance sheet](https://stockanalysis.com/stocks/dlo/financials/balance-sheet/) | Standardized financial statements | Latest reported period and two preceding fiscal years | Historical balance sheet; source-native currency and definitions |
| [DLO historical cash flows](https://stockanalysis.com/stocks/dlo/financials/cash-flow-statement/) | Standardized financial statements | Latest reported period and two preceding fiscal years | Historical cash flows; source-native currency and definitions |
| [EBANX payment-method infrastructure](https://docs.ebanx.com/docs/pay-in/processing/payment-methods/payment-methods-overview) | Regulatory filing / primary product evidence | Current product documentation; checked 2026-10-28 | Local collection, FX and cross-border settlement for international merchants |
| [Issuer interim earnings / primary filing — DLO](https://www.sec.gov/Archives/edgar/data/1846832/000184683226000031/dlo-20260630.htm) | Issuer IR / regulatory exhibit | Current fiscal period through 2026-11-07 | Standalone period, SBC/FCF and financial definition provenance |