DLO - DLocal falls as Q4 earnings miss slower growth expected in Q1'23

2023-04-05 11:25:07 ET

DLocal ( NASDAQ: DLO ) fell ~20% on Wednesday morning after the payments platform reported a Q4 miss and said it expects a slower revenue growth in Q1'23.

The company's Q4 GAAP EPS of $0.06 misses by $0.05 and revenue of $118.4M (+55.2% Y/Y) misses by $1.08M.

Comparatively, total payment volume, or TPV, increased 78% Y/Y and 21% Q/Q to $3.3B.

The slower revenue growth relative to the TPV was due to the business mix, considering higher local-to-local pay-outs; some large global retail merchants, with lower than average take rate growing faster; and decrease in revenue in Argentina.

Here is a look at the revenue breakdown by geography:

For Q1'23, the Uruguay-based company expects revenue to be between $135M and $138M, vs. consensus of $130.08M.

The estimated Q1'23 revenue represents a yearly growth of between 54% and 58% and quarterly growth of between 14% and 17%.

TPV is expected to be between $3.5B and $3.6B, representing growth of between 66% and 71% on a yearly basis and 6% and 9% on a quarterly basis.

Gross profit for the quarter is estimated to be between $57M and $59M, representing growth of between 31% and 35% yearly and between 3% and 7% quarterly. Q4 gross profit was $55M, up 42% on a yearly basis and 2% on a quarterly basis.

FY23 revenue is expected to be in the range of $620M to $640M, vs. consensus of $619.36M. Adjusted EBITDA is expected to be between $200M and $220M.

DLO has lost 58.01% of its value in the last one year.

The company was the supposed target of a bearish report from an investment firm in November last year. Shares have stabilized somewhat, and a stock buyback plan was a vote of confidence.

However, Seeking Alpha author Mike Zaccardi still does not find the stock appealing, saying shares remain in a bearish downtrend with a high price-to-sales ratio.

SA authors give to the stock a Hold rating, and the sell-side analysts also give the stock a Hold rating, with an average price target of $19.90.

DLO has decelerating momentum and negative EPS revisions when compared to other IT stocks, to the point that it gets a Sell rating from SA's Quant Rating system.

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