DLocal is a fast-growing fintech based in South America. The company is a cross-border payments company, one that makes it easy for companies like Amazon, Shopify, Microsoft, Uber, and Spotify to make and receive payments in emerging markets around the world. The company has over 400 merchants in its network, and its ecosystem has grown to 35 countries in South America, Asia, and Africa. Right now, most of its revenues (92%) come from its base of 15 countries in Latin America, namely Argentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Panama, Paraguay, Peru, and Uruguay.
A lot of people around the world do not have an “international” credit card, like Visa or Mastercard. In fact, there are over 700 different payment methods in the emerging markets where DLocal operates. So, it can be incredibly complex for internet companies to make and receive payments in emerging markets. DLocal simplifies this process: with just one app, you can add as many countries and payment systems as you want. That’s why the company is seeing such amazing growth from its existing client base. The company tracks its merchant engagement. Every year, its average customer adds another country to its roster. In 2021, its average customer added an additional 23 payment methods via the app. DLocal is priced for success, with its stock selling for 131 times earnings and 41 times sales. Over the last year, we’ve seen multiples in the stock market get squeezed, and DLocal has not been immune. But those high multiples also indicate how optimistic the market is about this company. DLocal’s market opportunity is vast. It’s already landed many high-profile internet companies as customers. And its ability to “land and expand” its relationship with those customers is extraordinary. DLocal is in the sweet spot, providing payments options overseas as companies like Amazon, Microsoft, Shopify, and other internet megacaps seek sales opportunities abroad. That’s why I think this $10 billion fintech is going to be one of the big winners over the next decade.