Cole Page
Credit Analyst · cole.page.2027@anderson.ucla.edu · colehpage.com
dLocal 4Q24: The Take Rate and the Merchant Question
Written the week DLO fell from $12.60 to $8.87 on a short report and a soft print. The take rate call was right and compression ran further than I expected. The conclusion I drew from it, that growth would stall without new merchants, was wrong.
Originally published on Substack, 08-Mar-25. Reproduced with copy edits only: the analysis, figures and conclusions are as written. The mark at the end was added in September 2026. I held DLO at 2.76% of portfolio on the publish date.
The Setup
DLO had a rough two weeks. An 8% drop to $12.60 on 20-Feb-25 on a short report from Hollenden Square Research, a short recovery, then a 30% after-hours fall following the 4Q24 call on 27-Feb-25, taking the stock to $8.87 on 4-Mar-25 and back to August 2024 levels.
The short report deserves little of the credit. Hollenden ran to 500+ pages alleging undisclosed related parties, money laundering, and accounting fraud, comparing dLocal to Wirecard and BCCI. I read all of it. Most of the claims reference events from more than three years ago, largely pre-IPO, and were addressed in the 2022 Muddy Waters round. The report substitutes leading questions for evidence: "Do these financials look like those of a legitimate payments company, or rather a potential money laundering or other dubious scheme?" It misreads normal high-growth fintech hiring as a governance problem. The Argentina bond claims rest on speculation. Muddy Waters in 2022 had real concerns and produced real change, including Pedro Arnt arriving from MercadoLibre as co-CEO in January 2023. This one is piggybacking on that work.
The earnings reaction is the part worth taking seriously, and I think it was also an overreaction. But the quarter contained three trends that matter more than the price move.
The Quarter
| 4Q24 | Value | YoY | QoQ |
|---|---|---|---|
| Total Payment Volume | $7.7B | +51% | +18% |
| Revenue | $204M | +9% | +10% |
| Gross profit | $84M | +20% | +7% |
| Net income | $30M | +4% | +11% |
| Adjusted EBITDA | $57M | +16% | +9% |
TPV grew 51% while revenue grew 9%, and the rest of this piece works through that gap. Cross-border grew faster than local-to-local for once, which is a good sign: it means existing merchants are using the platform to expand internationally rather than just processing in one market.
Where the Take Rate Went
Gross profit over TPV fell to 1.1% from 1.4% a year ago. Management named three causes on the call, and all three check out.
Higher volumes, lower rates. Large merchants negotiate down as they scale, the same as any bulk arrangement. dLocal serves Tier 0 and Tier 1 global merchants who process enormous volume and price accordingly. TPV grew 51% but a larger share came from the merchants paying the least per transaction. This is not by itself bad news. Winning the largest global merchants is what you want; the price is a lower blended rate.
Payouts growing faster than pay-ins. These are different businesses at the same company. On pay-ins, a customer pays a merchant and dLocal provides localization, fraud, and compliance around the transaction. On payouts, a merchant pays a worker or supplier, say Uber paying a driver in Mexico, and dLocal is moving money with far less service on top. Payouts grew 68% YoY against 44% for pay-ins. Mix shifted toward the lower-value half, so revenue per dollar processed fell.
Emerging market currency depreciation. dLocal reports in USD, so the same local volume converts to less revenue when the local currency falls.
Nigeria
The Naira is the clearest case. The Central Bank abandoned its peg in June 2023, and the currency lost 25% in a single day and roughly 40% in total. A second devaluation in February 2024 took another 44.5% month on month. Free float without intervention opened a gap between the official and parallel rates, compounded by a USD shortage tied to weak oil production, and inflation at multi-decade highs.
Nigerian revenue fell 90% YoY in the quarter and dragged Africa & Asia to -9%. Nigeria went from 13% of total revenue at the end of 2023 to 1.78% at the end of 2024. Egypt covered most of the gap, which is the argument for operating across many markets rather than a few. The volume did not disappear. Its value in dollars did, which is the same point as the take rate: TPV alone does not tell you what a quarter earned.
Regional
LatAm revenue was $152.9M, up 16% YoY, at 75% of the total. Growth came from Argentina and Colombia rather than the usual two. Brazil declined on regulatory changes affecting the largest merchant there, who moved to processing their own payments to stay compliant. Worth noting how that ended: dLocal kept the merchant and moved them onto other products. The revenue loss was regulatory, not a verdict on the platform, and the retention is the encouraging part.
Mexico slowed on the same Tier 0 mix effect described above.
Existing vs New Merchants
This is my largest concern and the reason I have not sized up.
| 4Q24 revenue | Amount | YoY |
|---|---|---|
| Existing merchants | $198.3M | +13% |
| New merchants | $6.1M | -48% |
New merchant revenue was $11.8M in 4Q23 and $6.1M now. The trend is not new and has worsened over the four years since the IPO. Net revenue retention of 106% says existing merchants keep spending more, which is good, but that number has been falling steadily and is stabilizing as merchants exhaust the products available to them.
Upselling existing clients is not a strong long-term strategy on its own. I would not expect substantial increases in NRR from here and would not rely on it for growth. If dLocal keeps failing to bring in new merchants, revenue growth slows.
Three reasons this is happening, all of which carry into 2025:
Competition. Stripe, Adyen and MercadoLibre are pushing into dLocal's most important markets, alongside local processors in Africa with sharper regional products. The cross-border payments market is forecast to reach $320tn by 2032, so everyone is paying attention.
Enterprise focus. Chasing one large merchant beats chasing a hundred small ones on cost to acquire, but it concentrates risk. Losing one Tier 0 merchant, or repricing one, moves the whole number.
Go-to-market execution. I do not want to assume without evidence, but a 48% decline in new merchant revenue against a market this competitive raises real questions about sales, pricing, and onboarding. New leadership has had barely a year. I want to see structural change here before I stop worrying about it.
2025 Guidance
| Metric | Guided YoY |
|---|---|
| TPV | 35–45% |
| Revenue | 25–35% |
| Gross profit | 20–25% |
| Adjusted EBITDA | 20–30% |
The three risks, sorted by whether management controls them:
- Currency volatility. Environmental. Hedging and processor renegotiation help at the margin.
- Take rate compression. Largely structural, and partly the price of winning larger merchants.
- New merchant growth. The one dLocal actually controls, and the one where execution has not been visible.
I am cautiously bullish and will likely add while the price is here. The business is growing, the compliance posture in hard markets is a real edge, and the reaction to this quarter had more to do with the tape than the print. But the third risk is the thesis. If 2025 passes without new merchant traction, growth slows regardless of how much volume runs through the platform.
How It Played Out
Marked as of 03-Sep-2026.
| 4Q24, as written | 2Q26 | |
|---|---|---|
| TPV | $7.7B, +51% | $17.7B, +92% |
| Revenue | $204M, +9% | $399.7M, +56% |
| Gross profit | $84M, +20% | $127.2M, +29% |
| Gross profit / TPV | 1.1% | 0.72% |
| Net revenue retention | 106% | 153% |
| DLO | $8.87 (04-Mar-25) | $15.78, +78% |
Two of the three calls held. The selloff was an overreaction, and the stock is up 78% from the low. Take rate compression continued and ran further than I expected: gross profit over TPV is 0.72%, down from 1.07% a year ago and from the 1.1% I was writing about. Every reason I gave for it is still operating.
The growth conclusion was wrong. I had the fact right, in that new merchant revenue was small and shrinking, and drew the wrong inference from it. I said NRR at 106% was decaying and should not be relied on for growth. NRR is 153% and has been above 140% for five straight quarters, with TPV retention at 188%. Existing merchants adding countries, payment methods and products turned out to be the entire engine, and it was a far better one than I gave it credit for. Management raised 2026 guidance to 60–70% TPV growth and 25–30% gross profit growth.
What I got wrong was treating net revenue retention as a maturing metric with a ceiling, when the product surface underneath it was still expanding. A merchant count of 760 across 60+ markets does not need to grow for revenue to compound if each merchant keeps buying more. My bear case assumed revenue could not compound without new logos, and it did.