dLocal, the Uruguay-based cross-border payments platform, reported a 10% decline in first-quarter net profit on Thursday, weighed down by a one-time tax adjustment that offset strong growth in revenue and total payment volume. The company posted net income of $41.9 million, or 14 cents per diluted share, compared with $46.7 million in the same period last year. The results sent shares lower in after-hours trading, with the stock slipping 4.9% to around $12.04 as of 5:48 p.m. Eastern time, according to MarketBeat, after closing regular trading up 4% at $12.66.
Record Payment Volume and Revenue Growth
Total payment volume (TPV) jumped 73% to $14.1 billion, surpassing the $14 billion mark for the first time in any quarter. Revenue rose 55% to $335.9 million, narrowly beating the analyst consensus compiled by Reuters. The strong performance reflects increased transaction volumes from existing merchants and the expansion of dLocal's local payments network across emerging markets. CEO Pedro Arnt described the company's opportunity as "larger than ever," citing momentum in core operations, new product launches, and a growing shift by global merchants toward local payment processing.
Margins Under Pressure
Despite the top-line gains, gross profit margin narrowed to 35% from 39% a year earlier, while gross profit as a percentage of TPV slipped to 0.84%. This indicates that dLocal is processing higher volumes but at slimmer take rates, partly due to onboarding more mature merchants and expanding into new payment rails and geographies. Operating expenses also rose, with costs from a late-2025 investment cycle still lingering in the quarter. Operating profit came in at $52.8 million, or $57.2 million when excluding the tax item.
Tax Adjustment Impact
The company recorded a $9.7 million tax adjustment related to installment payment products in select markets. dLocal described the charge as immaterial for previous annual or interim periods and said it does not anticipate comparable adjustments in future quarters. Excluding the adjustment, net income would have been $51.6 million, or 17 cents per diluted share, representing an 11% increase from the prior year.
Cash Flow and Balance Sheet
Adjusted free cash flow dropped sharply to $14.7 million from $39.7 million a year ago, which the company attributed to temporary working-capital swings, including tax-credit timing and an increase in receivables from advancement operations. As of March 31, cash and cash equivalents stood at $815.6 million, providing a solid liquidity buffer.
Competitive Landscape and Outlook
The competitive environment continues to intensify. In April, Brazilian rival Ebanx announced expansions into Thailand, Indonesia, and Turkey, with plans to enter Malaysia and Vietnam. Both companies are targeting global merchants seeking local payment options in markets where card usage remains limited. dLocal handles payments for major clients including Amazon, Uber, and Spotify, and operates across Latin America, Africa, and Asia through its "One dLocal" platform.
Looking ahead, dLocal reiterated its full-year 2026 guidance, which projects TPV growth between 50% and 60%, gross profit rising 22.5% to 27.5%, and operating profit climbing 27.5% to 32.5%. However, the company also flagged potential headwinds, including emerging market volatility, shifting tax policy in Brazil, currency swings in Argentina, Mexican tariff fluctuations, election-related uncertainty, and currency riskâany of which could push results off track.