Inside dLocal’s shifting revenue mix
Uruguay-based payments processor dLocal continued to post growth in 2024, driven partly by a surge in cross-border volumes for Q4. With the company now targeting a potential $1bn revenue year in 2025, we spoke to CEO Pedro Arnt and COO Carlos Menendez to find out more about the company’s shifting revenue mix and ongoing investment strategy.
dLocal delivered solid growth across key metrics in 2024, though it has seen some headwinds. Revenue rose 15% YoY to $746m on the back of total payments volume (TPV) rising 45% to $26bn. Though the company’s adjusted EBITDA fell -7% to $189m, it still reported a 6% rise in gross profits to $295m.
A significant portion of this growth came from cross-border transactions, which accounted for 47% of total TPV in FY 2024. Though this proportion has slightly declined from previous years, the company noted that cross-border payments volumes surged 67% YoY in Q4 2024, while across the full year remittances continued to be its fastest growth segment, alongside its core markets of financial services and commerce.
Latin America remained dLocal’s primary market, though dLocal is continuing to diversify into new markets in Africa and Asia, which overall accounted for around a quarter of the company’s revenues in 2024. With strong performance in countries like Argentina, Egypt and Mexico, alongside continued investments, dLocal is well-positioned to capture the growing demand for cross-border payments, though it is also continuing to see negative effects from volatility in some areas.
dLocal continued to grab market share last year but a number of factors have led to the company’s take rate declining as it targets expansion, which was cited by some as being a reason for the company’s share price decline after it revealed its earnings results. We spoke to dLocal CEO Pedro Arnt and COO Carlos Menendez to find out more about what drove dLocal in 2024 and how it plans to build on its ongoing strategy this year.
Topics covered:
- dLocal’s key revenue drivers in 2024
- The impact of higher volumes on take rates
- What’s driving cross-border volume growth for dLocal?
- Breaking down dLocal’s mix as it shifts to pay-outs
- dLocal’s Africa and Asia expansion pays off
- dLocal’s investment strategy and AI impact
dLocal’s key revenue drivers in 2024
In Q4 2024, dLocal saw revenue rise 9% YoY to $204.5m, backed by volume growth of 51% to $7.7bn. However, while revenue grew across the year, it did so at a slower rate than the previous year (15% in 2024 versus 55% in 2023).
Arnt noted that the company continued to deliver record results for TPV and gross profit on the back of “a diversified vertical base”, with notable increases in remittances (which nearly doubled YoY), SaaS, commerce, ride-hailing and financial services. In terms of geographies, Argentina, Egypt, other LatAm markets and a number of markets in Africa and Asia also drove growth.
According to Menendez, the company’s volume growth was a “testament to the need” of merchants aiming to sell globally, as well as the company’s capacity to retain and expand upon its existing customer base.
“If you look at our actual merchants and where they’re growing, our retention rate as we refer to it is up 140%, which basically means we are driving more volume with our existing customers, which is the ultimate validation of our ability to deliver on the base product,” he says.
While dLocal continued to grow revenue in 2024, the picture on profit is more mixed. On the one hand, dLocal saw gross profit of $84m in Q4 2024, driving 6% YoY growth over the full year to $295m of gross profit and a gross profit margin of 40%.
However, the company’s net profit was down -19% to $120m, with a margin of 16% down from 23% the previous year. Adjusted EBITDA for the year was also down -7% for the year to $189m, giving a margin of 25%, six percentage points down from 2023’s figure.
dLocal noted a hit to net income in Q4 2024 from a positive non-cash mark to market effect related to Argentine bond investments, as well as lower finance costs partially offset by higher taxes.
However, Arnt maintains that going forward dLocal will aim to become a “scale leader” in larger markets. “The company aims to maintain profitability through disciplined expense management and operational leverage,” he adds.
The impact of higher volumes on take rates
dLocal has continued to drive record TPV growth with large global merchants – however as these merchants continue to succeed and grow, delivering higher volumes, they also reach higher tiers in dLocal’s pricing model, meaning that those merchants are able to negotiate a decreased rate on the price they pay per transaction.
This is one of the major reasons why dLocal has seen a contraction on its take rate compared to prior years – this was 2.9% in 2024, versus 3.7% in 2023. The company said that its net take rate was 1.1% in Q4 2024, which reflected a market in which higher volumes are driving lower take rates, a rise in its share of pay-outs (which have a lower take rate than pay-ins) and depreciating of currencies in its target markets.
In a bid to help grow its take rate, the company will aim to drive cost efficiencies through broker renegotiations, improving its strategy and continuing to push into higher take rate markets and verticals. dLocal said during the Q4 earnings call that in the long term, this should partially offset the take rate compression, though it expects it to continue on a more “muted basis” as it introduces new products to generate incremental take rate.
A key question here is what this means for the company’s pricing. However, dLocal explained during the earnings call that the key metric for the company is sustained TPV growth and winning as much volume from merchants as possible, which it will continue to reflect in its pricing and overall offering.
Arnt says that “the most frequent discussion” the company has with investors is around take rate compression, but he explains that the company doesn’t manage the business based around it. “It’s an output,” he says.
“There are many factors that influence the take rate. These include the growth of our largest merchants and their progression through new volume thresholds in different markets, which impacts pricing tiers; the mix between pay-ins and pay-outs; the balance between local-to-local and cross-border transactions; as well as the mix of verticals and geographies we operate in. All of these components naturally affect the take rate.
“To offset these effects, dLocal is focusing on cost efficiencies, developing new products to improve monetisation and expanding into higher take rate markets and verticals.”
Menendez says that more volume for the customers does tend to reflect better economics for them, but also better scale economics for dLocal.
“As we continue to grow and continue to get bigger, our core functionality will continue to deliver at scale, but we need to really be managing our customers to make sure they’re happy with our end product,” he explains. “These are competitive markets and so we want to price in a way where people keep growing with us, but that can have an impact on the take rate over time.”
What’s driving cross-border volume growth for dLocal?
dLocal continues to split out its volumes into cross-border and local-to-local (i.e. spanning transactions within the same country).
For the full year, dLocal’s cross-border volume grew 37% to $11.9bn, accounting for 47% of the total share. This was driven by record growth in cross-border volumes in Q4 2024, which increased by 67% YoY to $3.7bn and accounted for 48% of dlocal’s payments volume for the quarter. By comparison, local-to-local volumes rose 38% YoY to $4bn in Q4.
This appears to be the first time since dLocal began splitting out its cross-border volumes that its quarterly growth has outpaced local volumes – according to the company, cross-border volume growth was primarily driven by commerce, financial services, on-demand delivery and software-as-a-service.
“Additionally, as we continue our expansion into more frontier markets, we are experiencing solid growth in our cross-border volumes,” says Arnt.
As the company expands, Menendez notes the importance of cross-border as a key driver for relationships with merchants. “In my mind, cross-border is the initiation of the relationship,” he says. “In many markets that are particularly complicated, it’s where the relationship ends up. But in the larger, more stable markets south of the equator, you do have a way of actually becoming part of the ecosystem there, even though your home market may be abroad.”
Breaking down dLocal’s mix as it shifts to pay-outs
Commerce (i.e. online retailers and platforms) continued to be the largest of dLocal’s verticals by volume in 2024, accounting for 30% share and seeing 60% growth. However, remittances – which since 2024 has been split out from dLocal’s wider financial services segment – saw the fastest growth (99% YoY) in 2024 as the company continues to build relationships in this area.
The company also saw significant YoY volume growth in software-as-a-service (66%), ride-hailing (47%) and financial services (46%). On the other hand, there was slower volume growth this year in the company’s travel (3%) and other (3%), which contains elearning and gaming, segments.
Growth in the remittances and financial services segments helped drive continued growth for dLocal’s pay-out transaction volumes (spanning payments where dLocal disburses money to businesses or customers of its merchant clients).
These rose by 68% in Q4 2024, while pay-in transactions (i.e. payments made to dLocal’s merchant clients) rose 44%. As a result, volumes from disbursements continue to grab a larger share of overall volumes at 31% in Q4 2024, versus 28% in Q4 2023. This meant that in 2024, payouts grew 58% and reached 30% of dLocal’s TPV.
“While we don’t manage the business by targeting a specific payout share percentage within our overall operations, we have seen payouts expanding healthily, driven primarily by the financial services and remittances verticals,” says Arnt.
Menendez sees the company continuing to find traction in remittance receipt markets in Africa and around the world, which is being driven by the availability of local currency payouts offered by the company. “That local currency availability is of interest to remittance companies,” he says. “[It’s] what differentiates us from other remittance companies and other B2B transfers in terms of the rate that we can provide.
“As we continue to see TPV increase on the collection side and get deeper into our existing merchants and across geographies, we will then continue to build that matching flow on the payout side.”
dLocal’s Africa and Asia expansion pays off
Diversification continues to be a pillar for dLocal’s strategy. LatAm’s 75% share of dLocal’s revenue is consistent with 2023, but the makeup of countries within the broader mix is shifting as the company’s move into African markets continues to bear fruit.
Also during 2024, dLocal added nine new licenses globally, including a key FCA-authorised payment institution licence from the UK, to help it close more deals and gain more market share.
In Q4 2024, Latin America remained the dominant region for dLocal, accounting for 75% of total revenue, driven by strong growth in Argentina (139% YoY) and Mexico (14% YoY), though Brazil saw a -33% YoY decline due to lower take rates.
Menendez explains that growth and lower inflation from Argentina has made an impact on the company. “We understand the market and its complexities, and we’ve been able to stay with our customers and grow with them during this period,” he adds.
Africa and Asia meanwhile contributed 25% of total revenue, bolstered by strong performance in Egypt, South Africa and Turkey, despite a dip in Nigeria due to the devaluation of the naira. During the earnings call, dLocal added that the company’s gradual move towards companies that are newer in its portfolio indicates the size of the remaining opportunity.
In addition to new markets, dLocal is also diversifying its payments portfolio, with the company having launched 20 new payment methods for pay-ins and seven for payouts, while adding around 100 new partner integrations.
“Payments are fragmenting around the world, sometimes driven by government, sometimes driven by consumer choice,” says Menendez. “Cash is part of that element too. And so we are constantly looking for new scale partners and redundancy to connect to.
“You will see many more integrations coming this year because we see more and more opportunities to connect and allow consumers to pay how they want to.”
dLocal’s investment strategy and AI impact
Looking ahead to 2025, dLocal expects revenue growth to speed up to 25-35%, which at the upper end of the range could see it pass $1bn during the year. TPV is projected to grow 35-45%, driven by expanding into new markets and verticals, and the company expects to increase adjusted EBITDA by 20-30%, giving it a margin of 24%.
The company will look to focus on growth in higher take rate verticals, moving away from its Brazil and Mexico markets (though it still expects to see growth here) and launching new revenue streams through additional products.
One new development area is stablecoins, which Menendez says merchants and consumers have begun requesting and which the company is considering in line with regulatory rules, where there is interest and demand to explore it.
“In terms of inter-company flows from a treasury perspective, particularly to some of these markets, Swift is very slow,” Menendez explains. “Where we see stablecoins growing is really in the facilitation of those movements between counterparties.”
Aside from investments in product, the company is investing in tech and innovation to drive efficiency for the company. Menendez discusses the growing importance of AI, which applied in a systematic way across the organisation will help the customer scale and grow its reach. This includes smarter routing for transactions, as well as automating others to help save money.
“Now, you can actually get much deeper into the data,” he explains. “There’s always been data and analytics behind everything we do, but AI is just an interface really that facilitates connectivity and the ability to move much more quickly than was available in the past.”
Driving efficiency for dLocal will be crucial as it aims to scale up profitably and (as many players have talked about this earnings season) address a massive global payments opportunity. During the call, dLocal noted that 85% of the world’s population resides in emerging markets and two thirds of global growth will come from there by 2035.
“The technology makes that reach easier to scale,” concludes Menendez. “We have the people on the ground with the expertise. And so we will continue to drive down that path and that will pay dividends to our customers, our merchants and our shareholders.”
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