Alpha Card: Investment Idea DLocal (DLO)

DLocal is positioning itself as the go-to rails provider between the Global South and global commerce

In this week’s high-conviction Alpha Card spotlight, we zero in on DLocal (DLO), a cross-border payments specialist riding the wave of fintech expansion across emerging markets. With revenue soaring, margins expanding, and blue-chip clients in tow, DLocal is positioning itself as the go-to rails provider between the Global South and global commerce. We break down its accelerating growth story, rising technical setup, and hard-to-replicate regulatory moat.

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📌 Company Overview

DLocal Ltd. (DLO) is a Uruguay-based fintech platform focused on cross-border payments in emerging markets. The company enables global merchants to accept and remit payments in local currencies without needing local entities. Its key clients include tech giants like Amazon, Netflix, Microsoft, and Spotify.

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🧠 Core Value Proposition

DLocal simplifies global commerce by bridging the payment gap between developed and emerging economies. Through a single API and platform, it handles compliance, fraud, and currency exchange, providing access to over 40 countries and 700 payment methods.

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📈 Financial Highlights (Q1 2025)

• Revenue: $184.4M (YoY growth: +34%)

• Gross Profit: $91.6M (49.7% margin)

• Adj. EBITDA: $56.3M (30.5% margin)

• Net Income: $36.5M (19.8% net margin)

• TPV: $5.2B (YoY growth: +49%)

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🔍 Strategic Position

DLocal continues its rapid expansion in Latin America, Asia, and Africa. It retains high-profile global clients and benefits from its first-mover advantage in complex regulatory markets. DLocal’s local payments expertise gives it strong competitive moats.

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📊 Stock Performance & Valuation

• Market Cap: ~$4.5B

• P/S (TTM): ~6.1

• EV/EBITDA: ~19.7

• PEG (TTM): ~1.0

• Short Interest: ~5.5%

DLO is priced at a premium compared to traditional payment processors, BUT its PEG ratio suggests fair valuation given growth.

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🤝 Strategic Partnerships

• Key clients: Amazon, Spotify, Meta, Netflix

• Integrated with regional acquirers and local banks

• Expanding partnerships in Africa and Southeast Asia

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⚠️ Key Risks

• Currency volatility and FX translation risk

• Dependence on large clients for revenue concentration

• Competition from local fintech and global giants (e.g., Stripe, Adyen)

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✅ Bullish Thesis

1. Revenue and TPV growing >30% YoY with improving margins

2. Mission-critical service for big tech in underbanked regions

3. High client retention and strong net revenue expansion rate

4. Efficient cost model and lean headcount

5. Geographic and regulatory moat is hard to replicate

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📉 Technical Analysis & Price Targets