20-F: DLocal Reveals Financial Details in Annual 20-F Filing

DLocal's 20-F filing provides a comprehensive overview of the company's financial performance, risks, and corporate governance.

Summary

• DLocal, a Cayman Islands-based payment processing company, filed its annual report on Form 20-F.
• The document details the company's financial performance, including revenue, cost of services, and profitability metrics.
• The company operates in 40 countries, primarily in Latin America, Africa, and Asia.
• DLocal's revenue model involves charging fees to merchants for payment processing services, with fees based on a percentage of the transaction value or a fixed amount per transaction.
• The company's TPV was US$17.7 billion, US$10.6 billion and US$6.0 billion for the full years of 2023, 2022, and 2021, respectively.
• Total revenues were US$650.4 million, US$418.9 million and US$244.1 million for 2023, 2022, and 2021, respectively.
• The company's net revenue retention rate (NRR) was 150% for the year ended December 31, 2023.
• Adjusted EBITDA Margin was 31.1% for the year ended December 31, 2023.
• The filing also outlines various risks associated with the company's business, including competition, regulatory compliance, and economic instability in emerging markets.
• The document also details the company's corporate structure, board practices, and related party transactions.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both the company's successes and the challenges it faces. The positive financial results are tempered by the risks associated with operating in emerging markets and the competitive landscape.

Positives

• DLocal experienced significant revenue and TPV growth.
• The company has a strong net revenue retention rate, indicating customer loyalty.
• The company has a relatively small number of customers account for a significant share of revenues.
• The company has a scalable platform that can adapt to the specific needs of new local markets it enters.
• The company has a technology-oriented, execution-driven management team fostering an entrepreneurial culture.

Negatives

• The company faces substantial and increasingly intense competition.
• The company is subject to complex and evolving tax regimes and foreign exchange regulations in the countries in which it operates.
• The company is subject to cyberattacks and may be subject to breaches of its information technology infrastructure and applications.
• The company is exposed to fluctuations in foreign currency exchange rates.
• The company is exposed to economic and political risk, the business cycles and the overall level of economic activity, which could negatively impact our business, financial condition and results of operations.

Risks

• The company's ability to adapt to rapid technological changes in the payments processing industry.
• Competition in the payments processing industry.
• The company's ability to implement its business strategy.
• The reliability, performance, functionality, and quality of the company's payments processing platform.
• Fluctuations in interest, inflation, and exchange rates in any of the countries the company may serve in the future.
• The availability of government authorizations or exemptions on terms and conditions and within periods acceptable to the company.
• The company's compliance with, and changes to, government laws, regulations, and tax matters that currently apply to the company.
• General economic, financial, political, demographic, and business conditions in the countries the company serves and their impact on the company's business.
• The company's ability to manage operations at its current size or manage growth effectively.
• The company's ability to successfully expand into new products and new markets.
• The company's ability to pursue and successfully carry out strategic acquisitions or investments.
• The company's ability to continue attracting and retaining new appropriately-skilled employees.
• Public health threats or outbreaks of communicable diseases, such as the COVID-19 virus and others.
• The interests of the company's principal shareholders.
• Changes in merchant or consumer demands regarding payment processing services and the company's ability to innovate to respond to such changes.
• The availability and effective operation of management information systems and other technology.
• The company's ability to comply with applicable cybersecurity, privacy, and data protection laws and regulations.
• The company's ability to protect itself against cybersecurity risks.
• Events or conditions that adversely affect the company's reputation or its image.
• Other factors that may affect the company's financial condition, liquidity, and results of operations.

Future Outlook

DLocal intends to continue expanding into new markets, developing new products, and retaining and expanding its merchant base while growing their overall volume processed through its platform.

Industry Context

The document highlights the increasing demand for integrated and comprehensive online payments infrastructure in emerging markets, which is driving growth for companies like DLocal.

Comparison to Industry Standards

• The document does not provide a direct comparison to industry standards.
• However, it emphasizes DLocal's differentiated compliance, tax, and fraud management capabilities, which are difficult for competitors to replicate.

Management Changes

Legal Proceedings

• DLocal is involved in several putative class action lawsuits alleging material misstatements or omissions in the company's public filings.
• The company intends to vigorously defend itself in these actions.

Related Party Transactions

• The company had revenues from transactions with merchants who were related parties.
• The company had costs with preferred suppliers (collection entities) who were related parties.
• The company had financial expenses regarding foreign exchange losses originated on an intra-group loan denominated in US Dollar between subsidiaries located in Argentina and Malta.

Stakeholder Impact

• The company's performance and strategic decisions can impact shareholders, employees, customers, and suppliers.
• The company's ability to manage risks and maintain regulatory compliance is crucial for protecting stakeholder interests.

Next Steps

• The company intends to continue expanding into new markets.
• The company intends to develop new products.
• The company intends to retain and expand its merchant base.
• The company intends to grow the overall volume processed through its platform.

Key Dates

Keywords

payment processing, emerging markets, cross-border payments, financial results, TPV, dLocal, payments, financials