dLocal stock plunges as Q4 earnings miss forecasts despite record payment volume

Shares of dLocal, the Uruguay-based fintech platform specializing in emerging markets, experienced a significant decline, plunging 29% to $9.83 after the company reported weaker-than-expected fourth-quarter earnings. The sharp drop adds to a 40% decline over the past year, with investors reacting negatively to disappointing profit and revenue figures.

For the three months ending December 31, 2024, dLocal posted a profit of $29.7 million, or 10 cents per share, a modest increase from $28.5 million, or 10 cents per share, in the same quarter of the prior year. However, this fell short of analysts’ expectations, which had projected earnings of 15 cents per share, leading to concerns over the company’s ability to maintain profitability.

Revenue for the fourth quarter rose 9% year-over-year to $204.5 million, up from $188 million in the same period of 2023. Despite this growth, revenue missed Wall Street’s forecast of $206.4 million, raising questions about dLocal’s ability to keep pace with analyst expectations.

How did dLocal’s total payment volume perform in Q4 2024?

Despite missing key financial projections, dLocal reported a record total payment volume (TPV) of $7.7 billion, representing a 51% increase from the previous year and an 18% sequential rise from the third quarter of 2024. This substantial growth underscores the company’s continued expansion in emerging and frontier markets, particularly across Latin America, Africa, and Asia.

However, while transaction volumes surged, the net take rate—a key measure of profitability—declined to 1.1%, down from 1.4% in Q4 2023. This decline was attributed to a growing share of lower-margin transactions, an increase in payout volumes, and the depreciation of local currencies in key emerging markets. The company highlighted strong volume growth in Argentina, Egypt, South Africa, and Turkey, but noted that performance in Brazil and Mexico was negatively impacted by shifts in the payment mix and lower take rates.

What are the key challenges affecting dLocal’s revenue growth?

While dLocal continues to expand in high-growth regions, it faces several challenges that are weighing on its revenue and profitability. A primary concern is the compression of take rates, which has been driven by the increasing presence of larger merchants that negotiate lower pricing tiers. As dLocal scales, these merchants demand more competitive pricing, reducing revenue per transaction.

Another significant challenge is currency volatility in emerging markets. Many of the regions where dLocal operates experience frequent currency fluctuations, and depreciation in key markets such as Nigeria and Argentina has reduced the value of revenue generated in local currencies. This has created additional pressure on the company’s margins, despite strong overall payment volume growth.

Despite these hurdles, dLocal reported a 16% year-over-year increase in adjusted EBITDA, reaching $57 million in Q4 2024. The company attributed this improvement to cost-control measures, including renegotiated processor and broker agreements, as well as an increased focus on higher-margin verticals.

What does dLocal’s 2025 guidance reveal about its growth strategy?

Looking ahead, dLocal has projected revenue growth of 25% to 35% in 2025, supported by sustained expansion in transaction volume. The company anticipates total payment volume to grow between 35% and 45% over the next year, reflecting confidence in its ability to capture greater market share within the global payments industry.

However, management has cautioned that take rates are likely to remain under pressure due to an increasing number of large merchants benefiting from lower pricing tiers. To counteract this trend, dLocal is pursuing a multi-faceted growth strategy that includes expanding into higher-margin verticals, optimizing cost structures, and introducing new payment solutions to strengthen its value proposition.

The company’s strategy also involves an increased focus on operational efficiencies, with plans to reduce costs through better negotiations with payment processors and enhanced hedging strategies to mitigate currency risks. Additionally, dLocal is investing in product innovation, with the goal of introducing new revenue-generating features that can help offset take rate compression.

Despite these efforts, the fintech firm faces challenges in maintaining profitability while growing its global footprint. Investors remain concerned about whether dLocal can successfully execute its strategy while navigating economic instability in its key markets.

How did investors react to dLocal’s earnings report?

Investor sentiment toward dLocal turned sharply negative following the earnings miss, with the stock suffering one of its worst single-day declines in recent months. The 29% drop to $9.83 signals growing concerns over the company’s ability to sustain its growth while maintaining profitability.

Over the past year, dLocal’s stock has declined by nearly 50%, reflecting broader market skepticism about fintech firms operating in emerging markets. While the company continues to expand its transaction volumes, its failure to meet profit expectations and the continued decline in take rates have raised red flags for investors.

Analysts have pointed out that while dLocal operates in a high-growth sector, it faces mounting competition from both global payment providers and regional players. Additionally, the macroeconomic instability in emerging markets adds another layer of risk, with fluctuations in currency values and regulatory challenges posing ongoing threats to earnings stability.

Can dLocal recover from its Q4 earnings miss?

The path forward for dLocal will depend on its ability to execute its 2025 growth strategy while addressing concerns over profitability and pricing pressure. The company’s guidance suggests confidence in its long-term expansion, but its performance over the next few quarters will be critical in restoring investor confidence.

If dLocal can successfully leverage its strong presence in emerging markets, introduce new revenue-generating products, and optimize operational efficiencies, it could regain momentum and reverse its stock decline. However, significant risks remain, including ongoing currency volatility, competitive pricing pressures, and macroeconomic conditions in the regions where it operates.

Investors will be watching closely to see whether dLocal’s projected 2025 revenue growth of 25% to 35% materializes, and whether the company can improve its take rates while sustaining transaction volume expansion. With strong competition in the global payments industry and mounting financial pressures, dLocal’s ability to balance growth with profitability will determine its success in the year ahead.