DLocal (NASDAQ:DLO) Chief Executive Officer Pedro Arnt said the payments company remains focused on expanding its role as a financial infrastructure provider for large global merchants operating in emerging markets, emphasizing that fragmentation in those markets continues to be central to the company’s value proposition.
Speaking with Sebastian Rodriguez, Managing Director of Technology Investment Banking at JPMorgan, Arnt described DLocal’s core advantage as its ability to give enterprise merchants a single integration into more than 60 emerging markets and thousands of payment mechanisms. He said many global companies find payments to be a “significant friction point and bottleneck to growth” when entering markets with fragmented systems, legacy technology and varied local regulations.
CEO Focus Shifts Toward Growth Initiatives
Arnt said much of his early tenure as sole CEO was spent rebuilding parts of the team and strengthening middle-office, back-office and regulatory capabilities. He characterized that period as a more “defensive agenda.”
Over the past six months, he said, his focus has shifted toward product innovation and geographic growth. Areas of emphasis include newer products such as buy now, pay later, alternative payment methods, merchant of record services and omnichannel offerings, including a physical payments presence.
On geography, Arnt said DLocal is a consolidated leader in Latin America and has a strong position in Africa, while Southeast Asia is becoming a key area of focus. He said the company sees an opportunity to leverage existing merchant relationships by adding Asian and Southeast Asian markets to its Latin American and African portfolio.
Guidance, Take Rates and Emerging Market Risks
Rodriguez noted that DLocal recently kept its guidance unchanged, including expectations for total payment volume growth of 50% to 60%, largely from existing merchants. Arnt said momentum through May was strong, particularly in TPV and gross profit, and that performance was trending toward the top end of guidance.
He described the strength as broad-based across verticals and markets, adding that there are “way more” markets ahead of schedule than behind schedule. Potential risks, he said, are largely tied to the nature of operating across volatile emerging markets, including foreign exchange movements, geopolitical disruptions, tariffs and trade barriers. Arnt also noted that Brazil’s recent lowering of de minimis thresholds on e-commerce imports was “actually looking positive” for DLocal’s merchants.
Asked about take rates, Arnt said declining take rates are increasingly an “inherent feature” of DLocal’s strategy rather than a flaw. He said management is focused more on winning share of wallet, adding large global contracts and increasing gross profit dollars than on defending current pricing levels.
“Payments eventually will be a scale play,” Arnt said. He added that DLocal would rather process larger volumes for major global technology clients, then monetize those relationships through cross-selling, complex frontier markets and new products. He said DLocal’s first-quarter gross profit grew 40% on TPV growth of 70%, compared with a gross profit guidance midpoint of 25%.
OpEx Investment Cycle and Product Development
Arnt said DLocal had previously communicated an investment cycle focused on areas such as product research and development, local market presence, compliance, regulatory capabilities, artificial intelligence and automation. He said the company had signaled that the investment cycle would end last year, though expenses in the first half of this year reflect the annualization of prior investments and January salary adjustments.
He also said an unexpected prior-period cost of about $9 million, related to 2023, 2024 and 2025, made first-quarter operating expense optics worse. Even so, Arnt said DLocal remains on track to hit guidance without needing to adjust away that incremental cost.
Arnt said DLocal expects operating leverage to begin showing more clearly in the second half of the year as comparisons become easier and sequential operating expense growth slows. He added that because gross profit continues to grow rapidly, the company can still invest in newer technologies while delivering operating leverage.
Competition and New Technologies
Discussing competition, Arnt said emerging markets require a different approach from developed-market payments. He contrasted DLocal’s model with the vertically integrated strategies used by companies such as Adyen and Stripe in developed markets, where credit card rails dominate.
In emerging markets, he said, more than half the population may not use or have credit cards, and payment systems are highly fragmented. Arnt said DLocal’s strength is providing a horizontal layer that connects global merchants to local financial infrastructure without trying to rebuild each market’s stack.
On agentic commerce, Arnt said he does not believe anyone yet knows how the technology will play out. DLocal’s approach, he said, is to ensure its stack can process payment mandates from agents, stay close to protocols being developed by companies including Google, OpenAI, Stripe, Visa and Mastercard, and advocate for local and alternative payment methods such as Pix, Yape and mobile money to be considered in those protocols.
He said if agents become rational optimizers of payment methods on a transaction-by-transaction basis, that could increase payment fragmentation, which he believes would benefit DLocal.
Cash Flow, Capital Returns and M&A
Arnt said DLocal continues to convert free cash flow at roughly 100% after adjusting for two interim reporting issues in the latest quarter. He described the business as “extremely asset light” and said it does not require large capital expenditures, though it does need a liquidity buffer because of the markets in which it operates.
DLocal’s capital allocation plan includes a dividend policy equal to 30% of annualized prior-year free cash flow, according to Arnt. He also highlighted the company’s announced $300 million share buyback program for its first year, saying a declining share count combined with growing earnings and free cash flow could be a powerful part of the company’s financial model.
On mergers and acquisitions, Arnt said M&A remains part of the company’s toolkit but is not central to its capital allocation policy. He said valuation gaps between private and public payments companies make many potential deals difficult, and he cautioned that technology M&A often destroys value unless the buyer is an experienced serial acquirer. He said DLocal is more likely to pursue small tuck-in acquisitions to add capabilities, contracts or talent, rather than larger deals, unless a clearly transformative opportunity emerges.
Arnt closed by saying DLocal is a way for investors to gain exposure to emerging market digitalization through the growth of major global digital companies operating across what he called the “Global South.” He said the company’s role is to ride alongside large clients such as Google, Netflix, Spotify, Amazon, Shein and DiDi as they expand in those markets.
About DLocal (NASDAQ:DLO)
dLocal is a fintech company specializing in cross-border payments and payouts for global merchants operating in emerging markets. Headquartered in Montevideo, Uruguay, the company offers a technology platform that simplifies complex payment flows, enabling businesses to connect with local payment methods through a single integration.
The dLocal platform supports a wide range of local payment options, including credit and debit cards, bank transfers, e-wallets and cash-based methods. It incorporates risk-management tools, compliance services and anti-fraud solutions to help clients navigate regulatory requirements and minimize payment failures across diverse jurisdictions.
dLocal serves merchants in sectors such as e-commerce, online marketplaces, digital content and gig economy platforms.
