Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
|---|
| This is another quarterly record proving our solution’s strong competitive position |
| We actually see a robust license portfolio across complex emerging markets as a potential competitive advantage when we think of DLocal long-term |
| We delivered what we consider stellar TPV growth of 55% year-over-year and an 11% quarter-on-quarter growth, surpassing $5 billion to $5.1 billion |
| Africa and Asia are expected to grow at a faster pace, signaling the long-term potential for global growth |
| We continue to benefit from structured tailwinds associated with digital economy and the growth of the middle class in emerging markets |
| The trust our merchants place in our solution is also evidenced in our stellar NRR of 150% |
| We’ve seen really good growth in our local-to-local business which is something that was doubted of us and we’ve delivered consistently so we’ll see what happens |
| So, we are very, very optimistic from what we’ve seen in 2023 and what we are seeing for the future |
| As I said before, I came to DLocal with the strong belief this is an outstanding business with significant opportunities ahead |
| Overall, we’re very proud of what we achieved in 2023 and we’re also excited about our outlook for 2024 and even beyond |
| Africa and Asia delivered an impressive 114% year-over-year increase |
| As proof of this, during 2023, as the main shareholders of the company, we have bought back $160 million worth of DLocal shares, showing our confidence in the long-term success of the business |
| As we continue our upward trajectory, we sought a robust financial leader capable of guiding us through the next phase of our growth |
| Our continued disciplined investment approach, coupled with a focus on sustainable growth, has delivered another outstanding year with a Rule of 40 at an impressive 110% |
| Despite the slowdown in adjusted EBITDA, we continue to deliver best-in-class profitability |
| Furthermore, we’ve maintained a best-in-class adjusted EBITDA over gross profit margin of 73%, even amidst ongoing investments to support our long-term ambitions |
| But we believe we have a good grasp on most of the attractive emerging markets |
| We believe there’s going to be consolidation in this space and we believe that DLocal is very well positioned to be a consolidator |
| I would say the large global merchants in Latin America, that’s long-term sustainable and very healthy |
| Despite facing significant market tests and macro challenges, we believe we’ve demonstrated the resilience of both our value proposition to our merchants and also of our business model, persistently growing and thriving through turbulent times |
| And as we accomplish this mission of closing the digital divide for emerging market consumers, we’re also tapping into an incredibly attractive long-term market opportunity that is the one that underlies the investment thesis in DLocal |
| We’ve had tremendous recent success with the marketplace product and we hope to continue to see that in 2024 |
| When we go to a year-on-year basis, gross profit grew by a still sound 27% year-on-year or a very strong 48% when we exclude Argentina |
| So we’re seeing some really interesting gains in new markets that we are offering to some of the largest global e-commerce players |
| The strong TPV performance we deliver translated into revenue growth of 59% year-on-year and 15% quarter-over-quarter, reaching a record $188 million |
| As the video illustrates, we’ve just delivered an incredibly strong year that is finished on a high note with regards to increases in both TPV and revenue |
| That was nearly 200% year-on-year growth as a vertical and then continued strength across many of the other verticals, financial services, ride-hailing |
| In complexity, we thrive and we will continue to serve global merchants and consumers in that market |
| Within a span of five years, our company experienced an extraordinary 14-fold expansion, achieving a record TPV of $18 billion, increasing by 67% year-over-year |
| So in terms of verticals, if you look at the disclosures, we continue to see incredible strength in e-commerce |
| Statement |
|---|
| Adjusted EBITDA margin contracted quarterly to 26%, primarily driven by the previously noted gross profit margin compression |
| As we detail in the accompanying presentation, the quarterly evolution of net income was negatively affected by lower EBITDA, inflation adjustments under IFRS, which are accounting impacts and increased stock-based compensation |
| First, a Q-on-Q decline in our higher take-rate cross-border business as a consequence of tighter capital controls leading up to the year-end transition in government, which resulted in what we believe to be a temporary shift towards more local-to-local settlement by our merchants |
| This impact that I’ve just narrated carried over to our gross profit line, resulting in a quarterly decrease in total gross profit to $70 million |
| On Argentina, Nigeria, Egypt, just to be clear again on what I said before, what we built into the guidance is we expect for Argentina and Egypt a certain level of margin headwinds when we think of gross profit margin in those markets as exchange rate spreads have tightened and so that is built in to 2024, the tougher comps from 2023 in those two markets that had high margins on wide FX spreads, especially in Q2 and Q3 |
| The weakness in Argentina was driven by two factors |
| Second, the country’s currency devalued significantly towards the end of the quarter, further affecting our performance in dollars, not unlike the impact felt by most other companies with a relevant exposure to the Argentine market |
| We believe that these results indicate that although downward pressure on take rates continues, as we’ve repeatedly signaled, it is happening at a slow pace |
| Our net take rate decreased during the quarter by 20.5 basis points Q-on-Q to 1.4% |
| Very importantly, by continuing to be obsessed about our merchants and having them in the center of everything we do |
| That’s down 6% Q-on-Q |
| Very, very slightly down, despite the big increase in revenues |
| Sequentially, that was a decrease of 29% |
| Egypt, as we’ve seen in Q1, the devaluation, that’s made for tighter spreads on repatriation and cross-border flows |
| Given that spreads were widening and now with the tightening of spreads on FX for 2024, we also assume that Egypt becomes a bit of a headwind short-term for us, so into 2024 |
| And more importantly, driven primarily by mix shift, as we still continue to see limited pricing pressure that’s derived from competitive dynamics |
| As I go down the P&L, all this resulted in adjusted EBITDA of $49 million, up 22% year-on-year, but down 11% Q-on-Q |
| But then that has sort of a flattening out |
| We’ve been through a lot last year and the fact that we haven’t lost any customer |
| The challenges of 2023 prompted a defensive approach, leading to operational consolidation |
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