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.

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.

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.

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.

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.

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.
• 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.

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.

Analyzed call: Q2 2026, complete material Q&A · Research snapshot: 2026-10-21

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.

Source	Type	Date / Period	What It Supports
dLocal Reports Second Quarter 2026 Financial Results / DLocal Limited	Company IR / earnings filing	Q2 2026	Latest operating results, guidance, products and financial supplement
DLO complete earnings-call transcript	Transcript	Q2 2026	Prepared remarks and all material Q&A exchanges
DLO regular-session historical price	Market data	2026-10-20 close	Common price used in returns, scores and zones
DLO valuation statistics	Market data	2026-10-20 close; ratios retrieved 2026-10-21	Market capitalization, shares, quoted multiples and current ratios
DLO historical 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	Standardized financial statements	Latest reported period and two preceding fiscal years	Historical balance sheet; source-native currency and definitions
DLO historical cash flows	Standardized financial statements	Latest reported period and two preceding fiscal years	Historical cash flows; source-native currency and definitions
EBANX payment-method infrastructure	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	Issuer IR / regulatory exhibit	Current fiscal period through 2026-11-07	Standalone period, SBC/FCF and financial definition provenance

Research context

• 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.

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.
• 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	Company IR / earnings filing	Q2 2026	Latest operating results, guidance, products and financial supplement
DLO complete earnings-call transcript	Transcript	Q2 2026	Prepared remarks and all material Q&A exchanges
DLO regular-session historical price	Market data	2026-10-20 close	Common price used in returns, scores and zones
DLO valuation statistics	Market data	2026-10-20 close; ratios retrieved 2026-10-21	Market capitalization, shares, quoted multiples and current ratios
DLO historical 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	Standardized financial statements	Latest reported period and two preceding fiscal years	Historical balance sheet; source-native currency and definitions
DLO historical cash flows	Standardized financial statements	Latest reported period and two preceding fiscal years	Historical cash flows; source-native currency and definitions
EBANX payment-method infrastructure	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	Issuer IR / regulatory exhibit	Current fiscal period through 2026-11-07	Standalone period, SBC/FCF and financial definition provenance