Operator: Still there, Pedro?
Pedro Arnt: We’re here. We’re just making sure we get our numbers right.
Operator: Okay. Just wanted to make sure you guys didn’t get disconnected. Thank you.
Pedro Arnt: Yeah. No. We’re here. So, Jamie, thanks for the comments on the presentation. I’ll give you directional. So, when I look at the new merchant growth, there’s a combination of some of the well-known large global brands, particularly some out of Asia, that have been relying on us for their expansion, mainly into Latin America, but we continue to increase some new geographies with them. You see that when you look at the e-commerce vertical, the growth there. We’ve had some ramp-up from another very large global merchant in Chile that’s also adding to that. And then the rest is fairly distributed among some smaller Tier 2 merchants that we’ve onboarded and whose ramp-up has been quicker, sometimes also because they typically exclusively use us for their international expansion.
Jamie Friedman: Okay. And maybe just as a follow-up to that same direction, I should know this, but can you remind us how much of the TPV or revenue come from the installed base each year? If that’s an obvious question, I apologize. But if not, is there a way to think about that?
Pedro Arnt: Jamie, I think, Maria or Diego or Seba can take that one. Just one more clarification on your previous question. Also, some of those Tier 2 merchants have an overlay from Nigeria and we’ve seen the big revenue jump in Nigeria because of the exchange issue. So that also drives some of the new merchant volume growth. I would say the large global merchants in Latin America, that’s long-term sustainable and very healthy. The Nigeria piece, as you know, is somewhat more volatile and less impactful at a gross profit level. I’ll hand it over to the team for the question on recurring revenue versus new merchant revenue.
Maria Oldham: Sure. In terms of our business trends, one of those is our NRR. So we continue to post 149% NRR per Q4 and 150% for the year, which shows that we continue to grow with our existing merchant base. We are still in the low-teens on the market wallet share of those merchants, so they’re very high potential still from our existing base. Still, we continue to work on our pipeline with very strong names coming in. In Q4, you saw $12 million of revenues coming from new merchant cohorts and this is pretty much in line with the starting of the cohort.
Jamie Friedman: Great. Thank you, Maria. Thank you, Pedro.
Operator: One moment for our next question. Our next question comes from Matt Coad with Autonomous Research. Your line is open.
Matt Coad: I think that was for me. This is Matt Coad from Autonomous Research. Guys, your language, I feel like, changed a little bit in terms of potential M&A. Just wanted to ask a question about that, just if you could double-click on kind of like what assets — what type of assets would intrigue you?
Sebastian Kanovich: Matt, Sebastian here. Thanks for the question. We’ve stayed very consistent over the years about our intentions to potentially do M&A. We’ve been extremely conservative around that, particularly because we really like our company and our organic growth story. We’ll continue to look at three potential vectors; one is commercial distribution; the other one is product innovation; and the third one is geographic footprint. Ideally, we’ll combine all three of those. We’ve done only one deal in our history, which was, in our view, an absolute home run back in 2021. But at the same time, we’ll always benchmark any potential M&A against our own company and what we could potentially do by buying back our own shares.
So, when we check or we deal with any other company, we always make sure to benchmark those against DLocal as a potential M&A target. We have a big pipeline of opportunity. We continue to engage with multiple targets. There’s nothing imminent. But it’s definitely a vector that we’re going to continue to explore. We believe there’s going to be consolidation in this space and we believe that DLocal is very well positioned to be a consolidator.
Matt Coad: Super helpful, Seba. Thank you. And then just as my follow-up, guys, the short-term investment cycle that you guys have touched on so far today, I just kind of wanted to unpack that a little bit more. Just it makes sense to us, right, like, there’s a lot of reinvestment that needs to occur to run a complicated cross-border payment system. But could you unpack a little bit, like, of why that’s occurring today and why it hasn’t occurred over time and kind of just reinforce why you think this is kind of a one-time investment cycle rather than just natural reinvestment that needs to occur consistently over time?
Pedro Arnt: Sure. Let me start by the back question. There is an element of playing catch-up. Let me give some more granularity when we look at 2024 guidance and where we’re increasing our investment. The greatest area of incremental spend is on the engineering talent pool. We’re striving to grow that talent pool by between 50% and 75%, and that’s by far the largest increase in spend. The second area is in operations. As we begin to consolidate our position across these 40-plus markets, we continue to add more processing partners, more relationship with issuers, more relationships with the local payments ecosystem and that requires a level of increase of our feet in the ground to build increasingly more robust operational capabilities in many markets where initially we launch with the bare minimal necessary to serve our merchants and then we add more and more capabilities in those markets.
