DLocal Posts 77% Volume Growth, Record Profit as FX Clouds Q4

DLocal grew third-quarter payment volume 77% year over year to $18.3 billion and booked record net income of $68 million, up 31%. The payments company nonetheless tempered its expectations for the remainder of the year, citing foreign-exchange headwinds and softer performance in some smaller, higher-margin markets.

Gross profit rose 28% to $132 million, while operating profit increased 37% to $76 million. Lower expenses helped push operating profit to 58% of gross profit, up from 54% a year earlier. For a payments company that monetizes volume across emerging markets, that ratio — the share of gross profit converted into operating profit — is the number practitioners watch closest.

What drove the growth?

Chief Executive Officer Pedro Arnt said existing merchant relationships continued to power expansion as clients added countries, business lines and payment methods. Net revenue retention (revenue from existing customers measured year over year) reached 140%, and total payment volume retention hit 173%.

Growth came from markets including Brazil, Mexico, Argentina, Colombia and South Africa. Ride-hailing and on-demand delivery were major contributors, while social media advertising was particularly strong in Brazil on election-related activity that management expects to normalize after the elections.

How do currency swings change the outlook?

DLocal reiterated its full-year guidance ranges, with payment volume growth expected toward the upper end of 60% to 70%. Arnt said volume growth was moderating against tougher comparisons following merchant ramp-ups in prior periods.

Gross profit growth is now expected around the midpoint of the 25% to 30% range. Arnt cited previously unanticipated fourth-quarter foreign-exchange headwinds in Brazil, Mexico and Argentina, which the company estimates will create a six-percentage-point swing in year-over-year gross profit growth for the quarter. Performance has also been somewhat softer in smaller, higher-take-rate markets in Africa and Asia, he said. Take rate is the revenue earned as a percentage of payment volume.

Management's operating profit growth outlook has moderated toward the lower end of its 27.5% to 32.5% range. Arnt cautioned that fourth-quarter results remain sensitive to the peak shopping season and that expectations could move in either direction.

Where did the profitability gains come from?

Diluted earnings per share rose roughly 35% to a record $0.23. Chief Financial Officer Guillermo López Pérez said share repurchases helped earnings per share grow faster than net income.

Operating expenses fell 11% sequentially to $56 million, reflecting lower third-party spending and headcount plus the timing of marketing expenses. Headcount declined 3% in the third quarter after peaking in the second, Arnt said.

López Pérez cautioned against treating the quarter's operating profit ratio as a future margin target. Marketing spending was concentrated in the first half, and one-off expenses ran lower than usual in the third quarter. Over a full year, management expects gross profit to grow faster than operating expenses, even if quarterly results are uneven.

Adjusted free cash flow reached $99 million in the quarter and $182 million for the first nine months. López Pérez said the quarterly figure benefited partly from the reversal of temporary working-capital effects, some of which should normalize in future quarters.

What is the capital position?

DLocal repurchased approximately $34 million of shares during the quarter, bringing year-to-date buybacks to about $120 million. The company also signed a $150 million credit facility in August.

López Pérez said the facility provides liquidity at the holding-company level for general corporate purposes, including buybacks, while cash held at subsidiaries supports local operations and regulatory requirements. That split between holding-company liquidity and trapped local cash is a structural feature of cross-border payments businesses operating under local regulatory regimes.

What about Mexico and Asia?

In Mexico, gross profit was affected by higher processing costs, including catch-up costs from prior periods. Arnt said DLocal needs to use its record payment volume in the country to lower its cost structure, adding that a concentration of large merchants at lower pricing tiers had also weighed on the business. Mexico could improve next year or potentially as the company exits 2026, depending on the shopping season, he said.

Arnt identified other Latin American markets outside Brazil, Mexico and Argentina as a potential source of sequential acceleration. Asia remains a longer-term priority: the region's fragmented payment methods and regulatory environments create opportunities, but the company must keep building infrastructure, local partnerships and team. Asia could contribute a mid- to high-single-digit percentage of revenue in 2027, depending on execution, he said, emphasizing that the estimate referred to revenue rather than gross profit.

DLocal has also launched physical payments in Mexico, and its buy-now-pay-later platform now counts more than 15 merchants. Arnt said the company's digital asset and stablecoin business is growing, while activity explicitly using agentic commerce protocols remains low.

DLocal is a payments technology company that helps global businesses accept and send payments in emerging markets. Its platform connects merchants to local payment systems — cards, bank transfers, digital wallets and cash-based methods — through a single integration.