Two months ago, I published a Deep Dive on DLocal (DLO), outlining my full investment thesis and explaining why I was initiating a position in the company.
Thank you for the clear thesis! This does seem like a huge opportunity with a very strong management.
I'm still trying to figure out valuation and growth prospects.
How is "take rate" defined? Is it Gross profit / TPV?
If so, it seems that it has been steadily declining:
2021: 2.73% ($202m / $7.4b)
2022: 1.91% ($202m / $10.6b)
2023: 1.56% ($277m / $17.7b)
2024: 1.15% ($295m / $25.6b)
2025 Q1: 1.05% ($85m / $8.1b)
Are these figures correct?
If no, what are the correct definitions/figures?
If yes, why do you expect them to reach a 2.75% take rate in 2030, as it seems competition is intensifying? (and guidance for 2025 suggests further contraction of take rate, as guidance for TPV growth is higher than gross profit at 35%-45% and 20%-25% respectively)
DLO defines its take rate as Gross Profit / TPV, so that figure isn't directly comparable to the one I used, which was Revenue / TPV. My 2.75% estimate would translate to around 1.325% assuming a 50% gross margin in the future — a level I believe is very achievable.
I chose a different metric because management has hinted at upcoming product and service launches. Since we don’t yet know the full details, I tried to simplify the assumptions and focus on a potential resurgence in the company’s profitability (something Pedro Arnt has been very vocal about, getting back to past levels of margins).
The take rate decline over the past few years has several drivers, which I covered in my Deep Dive, but importantly, it has been slowing down (from 1.09% in Q4 to 1.05% in Q1). A key reason is that Tier 0 merchants, who typically bring lower take rates, are becoming a larger portion of revenue — which I actually view as a positive sign for the company’s moat. As DLO continues to expand into smaller countries with higher take rates, this effect should gradually be offset. Management has also pointed to other initiatives and upcoming offerings that could help improve/stabilize take rates further.
All in all, predicting the take rate trajectory is tough, but even if my assumptions turn out slightly too optimistic, it may be because TPV grows much faster than I assumed in my model. In that case, the impact would be offset — since DLO is trading take rate for faster TPV growth to strengthen its long-term moat.
I’ll be updating my model again today — stay tuned!
Great article mate. I wish I had pulled the trigger before earnings, however, the earnings report did solidify my conviction so I guess I should be grateful still that I can get in now.
The dividend decision, after reacting the same as you initially, is actually ridiculously bullish long term. The best thing about it? We get paid out regularly for holding a stock that is growing fast with minimal capex. It was the last thing that spurred me to start a position despite it running from $8 to $12 in a short amount of time. I love their thinking outside the box approach
As always, I am immensely grateful to have found multiple stocks to put in my long term portfolio, largely in part due to your research…great work as always
Thank you for the clear thesis! This does seem like a huge opportunity with a very strong management.
I'm still trying to figure out valuation and growth prospects.
How is "take rate" defined? Is it Gross profit / TPV?
If so, it seems that it has been steadily declining:
2021: 2.73% ($202m / $7.4b)
2022: 1.91% ($202m / $10.6b)
2023: 1.56% ($277m / $17.7b)
2024: 1.15% ($295m / $25.6b)
2025 Q1: 1.05% ($85m / $8.1b)
Are these figures correct?
If no, what are the correct definitions/figures?
If yes, why do you expect them to reach a 2.75% take rate in 2030, as it seems competition is intensifying? (and guidance for 2025 suggests further contraction of take rate, as guidance for TPV growth is higher than gross profit at 35%-45% and 20%-25% respectively)
Thanks for your comment!
DLO defines its take rate as Gross Profit / TPV, so that figure isn't directly comparable to the one I used, which was Revenue / TPV. My 2.75% estimate would translate to around 1.325% assuming a 50% gross margin in the future — a level I believe is very achievable.
I chose a different metric because management has hinted at upcoming product and service launches. Since we don’t yet know the full details, I tried to simplify the assumptions and focus on a potential resurgence in the company’s profitability (something Pedro Arnt has been very vocal about, getting back to past levels of margins).
The take rate decline over the past few years has several drivers, which I covered in my Deep Dive, but importantly, it has been slowing down (from 1.09% in Q4 to 1.05% in Q1). A key reason is that Tier 0 merchants, who typically bring lower take rates, are becoming a larger portion of revenue — which I actually view as a positive sign for the company’s moat. As DLO continues to expand into smaller countries with higher take rates, this effect should gradually be offset. Management has also pointed to other initiatives and upcoming offerings that could help improve/stabilize take rates further.
All in all, predicting the take rate trajectory is tough, but even if my assumptions turn out slightly too optimistic, it may be because TPV grows much faster than I assumed in my model. In that case, the impact would be offset — since DLO is trading take rate for faster TPV growth to strengthen its long-term moat.
I’ll be updating my model again today — stay tuned!
Great article mate. I wish I had pulled the trigger before earnings, however, the earnings report did solidify my conviction so I guess I should be grateful still that I can get in now.
The dividend decision, after reacting the same as you initially, is actually ridiculously bullish long term. The best thing about it? We get paid out regularly for holding a stock that is growing fast with minimal capex. It was the last thing that spurred me to start a position despite it running from $8 to $12 in a short amount of time. I love their thinking outside the box approach
As always, I am immensely grateful to have found multiple stocks to put in my long term portfolio, largely in part due to your research…great work as always
Once again, I sincerely appreciate your support and kind words! :)