DLocal Q2 Earnings Call Highlights
Key Points
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- DLocal delivered record second-quarter results: Total payment volume surged 92% year over year to $17.7 billion, while gross profit rose 29% to $127 million and net income increased 28% to $55 million.
- Growth was led by ride-hailing and merchant expansion across travel, remittances, e-commerce and delivery, with local-to-local transactions reaching 61% of TPV. Brazil and Argentina posted record gross profit, although Mexico and some African and Asian markets faced margin pressure.
- The company raised its full-year outlook, now expecting TPV growth of 60%–70% and gross-profit growth of 25%–30%, while maintaining operating-profit growth guidance of 27.5%–32.5%. Management also highlighted increasing AI-driven automation, a planned merchant-of-record product and continued share repurchases.
DLocal (NASDAQ:DLO) reported second-quarter 2026 total payment volume of $17.7 billion, up 92% from a year earlier, as growth in ride-hailing, travel, remittances, e-commerce and other verticals drove record volume and gross profit.
Chief Executive Officer Pedro Arnt said the company processed more volume in the quarter than it did during all of 2023. The result marked DLocal’s fastest TPV growth since the first quarter of 2022 and extended its streak of growth above 50% year over year to seven consecutive quarters.
Gross profit rose 29% year over year to $127 million, while operating profit increased 15% to $64 million. Net income reached $55 million, up 28% from a year earlier, and diluted earnings per share were $0.18.
Volume growth led by ride-hailing and merchant expansion
Arnt said the company’s merchant relationships continued to deepen, with clients adding countries, payment methods and products. DLocal reported net revenue retention of 153% and TPV retention of 188% during the quarter. The company said it serves more than 760 global merchants across more than 60 emerging markets.
Ride-hailing was the largest contributor to sequential TPV growth, according to Chief Financial Officer Guillermo Lopez Perez. While one large global merchant was an important driver, he said growth was also supported by several ride-hailing and on-demand-delivery companies expanding meaningfully.
Travel, remittances, e-commerce, software-as-a-service and advertising also added to growth. Financial-services volumes were modestly lower, which Lopez Perez attributed primarily to seasonality among certain Travel-related merchants in Latin America.
Local-to-local flows represented 61% of TPV, up 6 percentage points from the first quarter. The shift reflected rapid growth in ride-hailing and on-demand-delivery activity, which typically requires local settlement.
During the question-and-answer portion of the call, Arnt said the rapid expansion of a large global ride-hailing merchant had pushed the company into “a whole new tier” of volume. He added that, excluding that merchant and certain currency-volatility effects, net take rate would have been close to flat sequentially even as TPV growth would have remained above 65% year over year.
Arnt said high-volume merchant ramp-ups can lead clients to reach lower pricing tiers more quickly, reducing headline take rates while still generating incremental gross profit. He said DLocal is focused on growing TPV and gross profit rather than managing to a specific take-rate target.
Regional results and margins
Brazil and Argentina were the principal contributors to gross-profit growth. Brazil generated record gross profit of $40 million, supported by ramp-ups in ride-hailing and travel merchants and continued e-commerce growth. Argentina produced record gross profit of $20 million, driven by e-commerce, ride-hailing and on-demand delivery, as well as lower advancement costs.
Elsewhere in Latin America, gross profit increased 6% sequentially and 32% year over year. Mexico continued to post strong volume growth, though gross profit declined modestly from the prior quarter. Arnt said Mexico’s revenue rose 64% year over year, but costs as a percentage of TPV increased slightly as DLocal was unable to reduce processing costs enough to offset lower pricing. He said the company needs to improve cost management and negotiations with processing partners in that market.
Gross profit in Africa and Asia declined sequentially, mainly because of a smaller contribution from higher-spread markets including Mozambique and Vietnam. Lopez Perez said first-quarter gains in those markets were not necessarily recurring.
Total operating expenses were $63 million, up 46% from a year earlier but down 4% sequentially. The year-over-year increase reflected the annualization of second-half 2025 investments, higher average salaries following the annual merit cycle, selected senior hires and marketing spending concentrated in the first half, including a World Cup campaign and merchant events.
Operating profit represented 50% of gross profit, up 6 percentage points sequentially. Lopez Perez said DLocal does not expect material headcount increases for the remainder of the year.
Automation initiatives and product expansion
Management said it expects operating leverage to become more visible in the second half as marketing spending eases, prior-period items do not recur and the company deploys automation and artificial-intelligence initiatives.
Arnt said more than 60% of DLocal’s code is AI-generated, contributing to nearly doubled engineering deployments year over year and shorter software-development lead times. The company expects automation to support efficiency across engineering, compliance, operations, commercial functions and customer support.
DLocal also plans to launch dMOR, its merchant-of-record solution, which would allow the company to act as the legal seller on a merchant’s behalf. Arnt said the offering is designed to handle local entity setup, tax filings and other statutory requirements in addition to payments. Its buy-now, pay-later offering is currently live in eight markets.
Company raises TPV and gross-profit outlook
Following first-half performance, DLocal raised its full-year TPV growth outlook to 60% to 70% year over year and increased projected gross-profit growth to 25% to 30%.
The company maintained its operating-profit growth outlook of 27.5% to 32.5%. Arnt said the unchanged operating-profit guidance reflects a $4.4 million prior-year tax item recorded in first-quarter operating expenses and foreign-exchange headwinds relative to the assumptions in its original forecast.
Lopez Perez said adjusted free cash flow was $69 million in the quarter, up 41% year over year, with conversion equal to 125% of net income. Under a $300 million share-repurchase authorization approved in March, DLocal had repurchased about 6.9 million Class A shares for $86 million through the end of the second quarter; all repurchased shares were canceled.
The reported effective tax rate was approximately 16% for the quarter, while the normalized rate for the first half was 15% excluding the nonrecurring prior-year tax adjustment. Lopez Perez said the tax rate may continue to fluctuate by country and business mix, and that potential OECD Pillar Two effects beginning in 2027 could create upward pressure, though the company said it was too early to quantify the impact.
About DLocal (NASDAQ:DLO)
dLocal is a fintech company specializing in cross-border payments and payouts for global merchants operating in emerging markets. Headquartered in Montevideo, Uruguay, the company offers a technology platform that simplifies complex payment flows, enabling businesses to connect with local payment methods through a single integration.
The dLocal platform supports a wide range of local payment options, including credit and debit cards, bank transfers, e-wallets and cash-based methods. It incorporates risk-management tools, compliance services and anti-fraud solutions to help clients navigate regulatory requirements and minimize payment failures across diverse jurisdictions.
dLocal serves merchants in sectors such as e-commerce, online marketplaces, digital content and gig economy platforms.
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