DLO - Q2-26 Earnings - Quick thoughts

Dlocal just reported earnings and the stock is down 3.5% in AH. It’s the same old yada yada yada about declining margins and take rate.

We all know. And yes we’d love to see the decline stagnating.

But let’s look at these numbers first:

Most important metrics to watch usually are: TPV, Revenue, Margins and Gross profit and take rates.

TPV (total payment volume) came in at $17.7B, which is 80% YoY (in constant currency) and 26% QoQ. This is the 7th consecutive quarter of 50%+ growth, and continued acceleration over the last 5 quarters. They processed more this quarter than in all of 2023

This translated to

• $400M in revenue

• $127M in gross profit

• Operating profit of $64M

• Net income was $55M

These growth numbers are great and exactly what we want to see. Guidance was even increased for both TPV and Gross profit. TPV from 50-60% to 60-70% and gross profit was raised to 25-30% YoY.

Operating profit guidance was maintained. And I guess that’s one of the things the market doesn’t like.

TPV retention was 188% and net revenue retention was 153%, 5th straight quarter above 140%. This metric measures both how well DLocal retains its existing customer base and how much additional revenue it gains from those clients over time.

Customer concentration (which some see as a risk) went from 62% to 63% for the top 10 merchants.

Now the most probably reason for the small drop in AH, the ever declining take rate story.

Normal take rate = Revenue / TPV → $400M / $17.7B → 2.26% (this was 2.39% last quarter)

Net take rate = Gross profit / TPV → $127M / $17.7B → 0.72% (this was 0.84% last quarter)

As we said, gross profit is falling. This is not new as management has guided for a 22.5% and 27.5% at the end of last year. Pedro flagged it in the Q4 2025 and Q1 2026 calls. He noted the 2025 investment cycle would pressure H1 margins via annualized OpEx, with operating leverage expected to kick in over the next few quarters / mainly in H2 2026 as costs moderate.

The main reason for the lower take rate seems to be the shift from cross-border to local-to-local. LtL now represents the 61% of TPV (growing at 141% YoY), while the higher margin cross-border ''only'' grew 46%

Also, Asia and Africa are looking weak. Gross profit $25.0M, -1% YoY and -27% QoQ on flat revenue; margin fell from 47% to 34% in one quarter.

As long as TPV and indirectly gross profit continue to grow as fast as it does now (and the guidance indicates it will continue), the declining take rate shouldn't worry you. Management has stated multiple they focus on growth instead of take rate. A bit of a slowdown would be welcome though.

I guess the market also doesn’t like the EPS miss, but I honestly could care less. This is not the focus of DLO right. The focus is on growing that TPV as fast as they can, while maintaining the highest take rate possible. But the growth is key here.

Still, with these numbers I don't see any reason why this won't be green tomorrow.

If you have any questions or remarks, feel free to shoot.

Cheers,

TacticzHazel.