On August 13, dLocal (NASDAQ:DLO) reported second-quarter results that were hard to poke holes in. Total payment volume hit $17.7 billion, up 92% year over year, its best pace in more than four years. Revenue climbed 56% to $399.7 million, and gross profit reached a record $127.2 million. For a company whose whole business is moving money faster and cheaper across emerging markets, this was about as strong a quarter as it gets.
Volume That Keeps Compounding
Behind the headline number is a business that keeps getting stickier with the merchants it already has. Net revenue retention landed at 153%, the fifth straight quarter above 140%, and TPV retention hit 188%, meaning existing clients are adding countries, payment methods, and products rather than just processing more of the same volume. CEO Pedro Arnt called it “the highest growth rate since the first quarter of 2022.”
Brazil and Argentina did the heavy lifting on profitability, with gross profit hitting records of $40 million and $20 million, powered by ride-hailing, travel and e-commerce merchants ramping up. Local-to-local transactions, where money moves within a single country rather than across borders, climbed to 61% of volume, up 6 percentage points from the first quarter, as ride-hailing and on-demand delivery merchants scaled fast.
dLocal is also pushing beyond core processing. Buy now, pay later is now live in eight markets, and the company plans to launch dMore, a merchant of record service that takes on the legal and tax headaches of entering new countries. It’s also landing new categories of customers, including artificial intelligence companies and digital asset exchanges, on top of a base that already includes four of the largest ride-hailing companies in the world.
Where The Growth Gets Harder
Not every market moved in the same direction. Mexico’s revenue grew 64% year over year, but sequential gross profit slipped as pricing tiers on large merchants matured and dLocal struggled to bring local processing costs down as a share of volume. CFO Guillermo Perez flagged that the company expects upward pressure on its effective tax rate starting in 2027 as countries adopt the OECD’s Pillar 2 minimum tax framework, though he said it’s too early to size the impact.
Executives also cautioned that some of this quarter’s strength won’t repeat. Marketing spending was front-loaded into the first half around a World Cup campaign, and much of the operating leverage management is promising for the back half still has to show up in actual results. Arnt himself noted that stripping out one outsized merchant relationship and currency swings, net take rate would have been roughly flat quarter over quarter, a reminder that some of the acceleration is concentrated rather than broad-based. With comparisons against this year’s numbers only getting tougher into 2027, the last two quarters’ pace may be difficult to repeat.
How Wall Street Is Pricing It
Hedge fund ownership of dLocal slipped from 26 funds to 23 in the most recent quarter, a modest pullback in institutional conviction. Short interest sits at 14.83% of the float, a level that points to a real bear camp positioned against the stock. Yet shares trade at just 13.53 times forward earnings as of August 27, a multiple that assumes little of the growth management just delivered.
What Happens From Here
dLocal’s quarter makes a strong case that its platform is winning share across emerging markets faster than almost anyone expected, but the same call flagged real friction underneath. Margin pressure in Mexico, tax uncertainty starting in 2027, and a take rate that leaned on one oversized merchant relationship all complicate the growth story. The next two quarters need to show the promised operating leverage actually materializing as automation rolls out.
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