Dlocal Ltd Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Beatriz Abreu - Goldman Sachs - Analyst : Hi, everyone. Thank you for the call and for taking my question. My first question is on the gross profit loss in Brazil. So you showed in the presentation, I think Maria alluded in the prepared remarks of lost and share of wallet in one top merchant in Brazil. Could you maybe give us some more color on that if you expect other merchants to follow suit? What what specifically happened there? And my second question is regarding the decrease in G&A in the quarter, right fell 16% sequentially. And I think Mark mentioned that it's due to additional cost controls, but Pedro mentioned that you still intend to continue with the plan on investing and you're an engineering team back office capabilities, etcetera. So just wondering if that expense line is, if that level still makes sense going forward, given your investment plans, how should we think about expenses going forward? Does it increase from here? And especially going forward into next year also. Thank you.

Question: Beatriz Abreu - Goldman Sachs - Analyst : Very clear. Thank you.

Question: Guilherme Grespan - JPMorgan Chase & Co - Analyst : Hi, good morning everyone. Thank you for the presentation. Congrats on results, very strong operational performance. Just on the country base, Pedro. We noticed very strong gross profit growth specifically on the other geographies which is not sure if we can say non core because as you said, you're a global company, but it's outside the, the names you usually put in the breakdown of cross border profit other [Lata] and other Africa was very strong. So just to confirm if there is any new geography that you were seeing that is ramping up very fast. And what is the nature of the business if it's more, cross border or more local to local in those geographies? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 11:00PM, DLO.OQ - Q3 2024 Dlocal Ltd Earnings Call

Question: Guilherme Grespan - JPMorgan Chase & Co - Analyst : That's clear. Thank you and congratulations again.

Question: Jamie Friedman - Susquehanna Financial Group - Analyst : Hi, it's Jamie Friedman. So I want to ask, is it fair to think of the fourth quarter guidance as a run rate for 2025? I realize you're not giving guidance yet for next year. But any context about how to think about the relationship between the fourth quarter and '25 would be helpful.

Question: Jamie Friedman - Susquehanna Financial Group - Analyst : Okay, thanks and then -- that's clear. I wanted to ask about remittances. So, you had the some real nice traction and the growth number in front of me, but it was like 80%. I'm doing that memory. When you go into the money grams of the world or others with a Remittance narrative, what do you, what does that conversation look like? And what do you feel like? Is your competitive advantage with your Remittance offering?

Question: Jamie Friedman - Susquehanna Financial Group - Analyst : Got it. Thank you, Pedro. I'll drop back in the queue.

Question: Neha Aggarwal - HSBC - Analyst : Hi. Thank you for taking my question just a quick one on the gross profit margin. When we look at Latin America, we are at a margin of around 38%. Whereas in the other deals, we're around 56%. How, where should we expect this to normalize? What is a good level of gross profit margin to expect? Because we think over time you should be gaining more leverage in terms of reducing cost with your partners and that should reduce the cost of doing business. You can elaborate on that. It's a more medium term question that would be helpful to understand.

Question: Neha Aggarwal - HSBC - Analyst : Last question Pedro on the cost for this year, you mentioned investments leading to higher OpEx. How should we think about the investments going forward? Do you think you'll be done with these enhancements in the business in 2024 or should we continue to expect more investments coming through in 2025 or should you again go back to gaining operational leverage. How should we think about the OpEx going forward? Thank you so much.

Question: Neha Aggarwal - HSBC - Analyst : Thank you, Pedro. Thank you so much.

Question: John Coffey - Barclays Bank - Analyst : Great. Thank you very much for taking my question. I guess the first is I was wondering, you mentioned some investments that you recently made in Nigeria, Ecuador and Uganda. If you start to pay off, where do you see them? Is it just with more volume TPV or do you see like lower COGS? I just want to trying to get a better understanding of, you know how that shows up on the income statement. And the second question which I can just ask now is on your payments orchestration solution. Is this something that your merchants have to opt into? Are they auto enrolled? I was wondering if you provide a little bit more information about who you're approaching with this solution. Is it new customers existing and how the financials might be a little bit different from the solutions they may have been using in the past? Thanks.

Question: John Coffey - Barclays Bank - Analyst : Great. Thank you very much.

Question: Cassie Chan - Bank of America Merrill Lynch - Analyst : Hey guys, thanks for taking my question. So I guess just wanted to go back to fourth quarter. I know you guys mentioned typical seasonality given the ramp up of commerce and, and the holiday shopping. And you know, obviously the full year guide was reiterated, which kind of implies stable quarter-over-quarter growth both on GP and in margins, but mainly focusing on the top line for the fourth quarter, I guess like, is there anything that you guys have seen in the data quoted a date as a reason to believe why the 4Q seasonality, you know, that you typically expect wouldn't materialize or is it just, you know, trying to be a little bit more conservative given obviously volatility in the emerging markets. And then, and then I have a follow up. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 11:00PM, DLO.OQ - Q3 2024 Dlocal Ltd Earnings Call

Question: Cassie Chan - Bank of America Merrill Lynch - Analyst : Okay, understood. And I guess just wanted to ask about the Top 10 clients, you know, that was up nicely. I think about 16% and then non Top 10 clients of about 8%. I think in terms of revenue growth, how should we think about ongoing revenue concentration? It's obviously still above, you know, 60% of your total revenues and, and diversification as well both within top and non Top 10 clients going forward. Thank you.

Question: Cassie Chan - Bank of America Merrill Lynch - Analyst : That's very helpful. Thanks so much guys.