DLocal (NASDAQ:DLO) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
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View the webcast at https://edge.media-server.com/mmc/p/q2gbyzve/
Summary
DLocal reported a significant increase in Total Payment Volume (TPV) to $14.1 billion in Q1 2026, marking a 73% year-over-year growth.
The company continues to expand its geographic and vertical reach, now operating in over 60 countries and serving 760 enterprise merchants.
Strategically, DLocal emphasizes localization of payment methods as a core differentiator, supporting local payment schemes across various emerging markets.
Despite strong top-line growth, operating expenses were higher than anticipated due to carryover from prior investments and a one-off tax adjustment.
Management remains confident in maintaining full-year guidance and anticipates improved operating leverage in the second half of the year.
The asset acquisition in Africa is expected to enhance capabilities and positioning but is not immediately impactful on financial results.
DLocal is seeing increased interest from merchants in localized payment solutions, particularly in Africa and Asia, which are driving growth.
Full Transcript
OPERATOR
Welcome to DLocal first quarter 2026 earnings conference call. At this time all participants are in listen only mode. After the speaker’s presentation there will be a question and answer session. Instructions will be given at that time. I will now hand the call over to the company.
Mirele Aragao (Head of Investor Relations)
Good afternoon and thank you all for joining our earnings call today. If you have not seen the earnings release, as always, a copy is posted in the Financials section of the Investor Relations website. On the call today you have Pedro Arndt, Chief Executive Officer, Guillermo Lopez Perez, Chief Financial Officer, Christopher Stromeier, SVP of Corporate Development and Mirele Aragao, Head of Investor Relations. A slide presentation has been provided to accompany the prepared remarks. This event is being broadcast live via webcast and both the webcast and presentation may be accessed through Delocal’s website at investor.dlocal.com the recordings will be available shortly after the event has concluded. Before proceeding, let me mention that any forward looking statements included in the presentation or mentioned in this conference call are based on currently available information and DLocal’s current assumptions, expectations and projections about future events. Whilst the Company believes that our assumptions, expectations and projections are reasonable given currently available information, you are cautioned not to place undue reliance on those forward looking statements. Actual results may differ materially from those included in D Local’s presentation or discussed in this conference call for a variety of reasons, including those described in the Forward Looking Statements and Risk Factors section of DLocal’s filings with the securities and Exchange Commission which are available on DLocal’s Investor Relations website. Now I will turn the conference over to delocal. Thank you.
Pedro Arndt (Chief Executive Officer)
Good afternoon everyone and thank you for joining us today. This year, 2026 marks two important milestones for Delocal. Ten years since we founded the company and five years since our NASDAQ IPO. Before I go into the quarter’s results, I wanted to reflect briefly on what has been built over the past decade and why it matters for where we’re going. The story of the past 10 years is one of consistent compounding growth, built on a vision of helping world class merchants reach consumers across emerging markets or as we like to call them, the markets of the future. If we look back at 2016, we processed $100 million in TPV in a single country on the last 12 months basis. As of this quarter we’ve crossed $47 billion across the entire Global south. So we now process more in a single day than we did in our entire first year of operations. Only a decade ago. That’s an almost 90% compound annual growth rate sustained over a decade. And what is most notable about that trajectory is not the scale itself, but the consistency throughout every phase. From Latin America, Africa and Asia, from a handful of payment methods to over a thousand, from a startup to a publicly listed company, the strategic model has not changed. OneAPI deep local infrastructure Continuous expansion of payment method coverage, licensing, regulatory capabilities and products. The same focus on helping merchants operate efficiently in markets where the next wave of digital consumers is moving online. Delocal now operates in more than 60 countries, including new markets such as Algeria, Qatar, Kuwait and Oman. We now hold 38 licenses and authorizations across 26 markets, with 16 additional applications in process. Our platform reaches approximately 70% of the world’s population, serving over 760 enterprise merchants through a single API. It took a decade of investing in infrastructure, building regulatory ip, forging relationships with local ecosystem stakeholders, and learning how to operate at scale in markets that most find too complex to enter. Those foundations are not easy to replicate and even harder to outperform. The reason all of this infrastructure matters is quite simple. Localization is what ultimately drives success throughout emerging markets. Local payment methods are no longer alternative options in many of our markets, they are the primary way consumers transact online, and their share continues to grow. For merchants, supporting them is not just about improving the checkout experience, but also reaching consumers who do not transact in any other way. In Peru, for example, Jape drives 40% net new customers to some of our merchants. In South Africa, Playflex drives 80%, and our own innovation layer such as smart pics and biometric enabled pics lets us drive differential performance on top top of those existing local rails. Even within the global credit card schemes, local processing is key to maximizing authorization and conversion rates in emerging markets compared to international acquiring. When merchants use international card rails to complete transactions, we’re able to deliver up to 20 percentage points conversion uplift. In certain markets, the same Visa or MasterCard card converts significantly better when processed locally. But Visa and MasterCard are only part of the story. There is a growing base of local card schemes emerging across the global South. In Saudi Arabia, mada represents around 90% of cards issued, verve is roughly 60% of Nigeria’s digital payment market, and Misa is held by about half of eligible adults in Egypt. If you don’t support these schemes, you simply cannot win in those markets. That’s what DLocal is local payments, local processing of global cart schemes, and local scheme coverage all in a single API Vertical diversification is the other dimension of resilience to our model. Many payment companies tend to be concentrated in one or two verticals. Our platform has demonstrated the ability to scale across a wide range of industries and use cases. Every single vertical in our portfolio grew between the first quarter of 2024 and the first quarter of 2026 and our mix has become increasingly diverse across categories. E Commerce remains our largest vertical. We work with half of the top global platforms in our markets and they keep expanding with us in ride hailing. We serve four of the five largest players operating throughout emerging markets and continue to expand global deals with them. For several of those players, we also process their on demand delivery businesses. Both of these verticals inherently carry a higher local to local component with stronger adoption of local payment methods, which supports the strength you are seeing in our local to local volumes. In remittances, one of our fastest growing verticals, we continue to partner with major players and support their geographic expansion driven by sustained strategic focus and ongoing merchant onboarding. Looking forward, we’re excited about the prospects of our travel and gaming verticals as we continue to build these vertical payment flows that optimize for the particularities of multiple industries. Perhaps the most compelling illustration of our business model in practice is at the individual merchant level, so I wanted to take a minute to walk through three examples of top 10 TPV merchants for us that demonstrate how it is that we scale alongside our customers over time. What we see consistently is that after an initial ramp up period, relationships deepen as merchants expand into new countries, adopt products and add payment methods. One of our hot ride hailing merchants who we’ve worked with since 2016 initially started with one specific use case and later expanded into on demand delivery. We now serve this client end to end across 18 countries and are expanding through recently signed new deals that further reinforces the long term growth potential of this relationship. An Internet service provider who we’ve categorized as software as a service Merchant onboarded in 2021 has expanded from 19 countries to 40 in the last three years, a testament to the trust these merchants place in DLocal to power their international expansion. What enables that pace is our licensing portfolio, our local payment method coverage, and our ability to open frontier markets very quickly. In markets such as Kenya, for example, over half of users transacting with this merchant via mobile money are net new customers they would not have reached otherwise. And an E Commerce merchant we onboarded in 2023 started with only two countries but now operates in 21 with buy now Pay Later Having gone live in Mexico and South Africa over the past two quarters, which are driving higher ticket sizes and over 50% net new users for them. Examples like these are why our revenue retention has exceeded 140% for four consecutive quarters. But as we like to say, we’re still in the early early days. These three merchants, for example, all grew TPV north of 70% year on year during the first quarter of 2026. So to wrap up 10 years and the thesis is intact, the opportunity is larger than ever and we’re better equipped to capture it than ever before. The infrastructure we’ve built, licenses, payment methods, stakeholder relationships and data, the technology it all abstracts local complexity and compounds in value over time. The combination of a strong base business momentum, a product roadmap that is beginning to gain traction, and secular tailwinds across our markets as merchants increasingly convert to local processing gives us confidence that the next decade can be as impressive as as the last. With that, let me hand the call over to Guillermo to cover our quarterly financials.
Guillermo Lopez Perez (Chief Financial Officer)
Thank you, Pedro. Good afternoon everyone. Let me take you through Q1 results. Top line momentum continued to accelerate with TPV north of $14 billion for the first time and gross profit reaching a new record. The bottom line though, reflects two specific dynamics I want to address upfront. The expected and already flagged higher OPEX carrying over from our 2025 investments and a non recurring prior year tax adjustment. TPV reached $14.1 billion in Q1, up 73% year on year and 7% quarter on quarter. Our sixth consecutive quarter above 50% growth and that’s a number we’re very proud of. And more importantly, this growth isn’t concentrated in just one place. It’s broad based and runs across different countries, verticals, merchants and products. Our top three markets, Mexico, Brazil and Argentina continue to grow consistently and we’re also seeing a strong contribution from markets like Chile, Nigeria, Colombia and Vietnam. On verticals. Travel led quarter on quarter growth at 38%, driven by a new expansion deal with a key global travel merchant. This is a vertical that’s still early for us, but it’s gaining real traction on demand. Delivery also grew strongly quarter on quarter at 24%, fueled by the expansion of deals with both regional and global merchants. On the other hand, E commerce and remittances deliver soft results sequentially consistent with the expected seasonality. Following the fourth quarter, peak gross profit reached a record $119 million, up 40% year on year and up 2% quarter on quarter on a sequential basis. The gross profit performance is explained by two key positive Argentina recovery, which we saw a strong volume growth and normalized funding cost and growth in Africa and Asia with notable contribution from Nigeria, Mozambique and Vietnam which is also helping us drive a more diversified geographic mix. Those were partially offset by Brazil’s normalization after an exceptionally strong Q4 together with a modest mix shift to lower tech break merchants across all the LATAM and other smaller markets. But most of these markets are still growing strongly in volume and the quarter on quarter dynamics are driven by mix and seasonality, not by an underlying softness in demand. Very importantly this quarter we decided to book a one off prior period tax adjustment. During an internal review of certain tax items and after consulting with our advisors, we adjusted our tax treatment for prior periods of one of our installment payment products in certain markets to reflect what we determined to be the most appropriate position and the applicable rules. This out of period adjustment was not material to any previously reported annual or interim period and we do not expect to record comparable items in future quarters. The total impact was $9.7 million of which approximately $5.3 million landed in the corporate tax line and $4.4 million in operating expenses. This related to indirect and other taxes. Given its non recurring and prior period nature, we think the normalized numbers tell the real bottom line story better. Operating profit for the quarter was $53 million as reported, but $57 million excluding this one off out of period adjustment representing a 25% growth year on year and a 48% operating profit to gross profit ratio. Excluding the one off on the cost side, total operating expenses were $62 million excluding the auto period adjustment, up 58% year on year and 16% quarter on quarter. This reflects the expected carryover of the second half of 2025 OpEx into the first quarter, something we had flagged at our last earnings call. As we close out our investment cycle, a portion of that cost base is annualized into 2026 and the first half of the year is naturally where that pressure is most visible. This reflects the timing of our 20242025 investment cycle moving through our P and L. We expect that to moderate as the year progresses. Below the operating line. Net income came in at $42 million as reported. Adjusted for the same one off we would be at $52 million which represents about 11% year on year growth. It’s worth noting that Q1 2025 benefited from approximately $7 million in non cash mark to market gains in our Argentina bond holdings plus a …
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