dLocal Limited

dLocal Limited (NASDAQ: DLO) is a payments technology company focused on facilitating cross-border transactions, helping global merchants manage payments efficiently in emerging markets. Its strong infrastructure supports innovative payment solutions across regions including Latin America, Africa, and Asia..

As per our previous Kalkine’s American Tech Report published on ‘DLO’ on June 24, 2025, Kalkine provided an ‘Buy’ stance on the stock at USD 10.26 based on fundamental analysis and the stock price has now moved up by ~ 52.63% since then and has breached resistance level 2.

Noted below are the details of support and resistance levels provided in our previous report:

Rationale – Sell at USD 15.66

• Decline in Net Income: Despite robust top-line growth, dLocal reported a decline in net income, which fell 7% year-over-year to USD42.8 million in Q2 2025, compared to USD46.2 million in Q2 2024. Sequentially, net income also declined by 8% from Q1 2025. This was primarily impacted by currency-related losses, particularly from the devaluation of the Argentine peso, which negatively affected the company’s bond portfolio.
• Margin Pressures: Gross profit margins came under pressure, falling to 39% in Q2 2025 from 41% in the same period of 2024, although flat compared to Q1 2025. Similarly, gross profit over TPV declined to 1.07% from 1.16% a year earlier, reflecting increased costs and regional headwinds. These margin contractions suggest that although volumes and revenues expanded, profitability per transaction has been compressed.
• Rising Operating Expenses: Operating expenses increased by 9% year-over-year and 10% sequentially, driven by higher headcount—particularly in technology roles—and elevated third-party service costs. While these investments are intended to strengthen capabilities, they add pressure on short-term profitability. The increase in expenses partially offset gains in operating profit, highlighting ongoing cost escalation.
• Currency and Market Risks: dLocal continues to face significant exposure to macroeconomic volatility in emerging markets. Currency devaluations in Argentina and Egypt directly impacted revenue, spreads, and net financial results. Additionally, regulatory and trade risks in Brazil and Mexico, as well as retry costs in Chile and Colombia, have created operational challenges. These risks contributed to net financial losses of USD3.8 million in the quarter, compared to a gain of USD28.0 million in Q2 2024.

Valuation (Using Price/Earnings Multiple)

Share Price Chart 

Conclusion

dLocal’s Q2 2025 performance, while strong in volumes and revenue, was weighed down by several negatives. Net income declined both year-over-year and sequentially, pressured by currency devaluations, particularly in Argentina. Margins narrowed as gross profit over TPV fell, reflecting profitability pressures despite higher volumes. Rising operating expenses from increased headcount and service costs further constrained efficiency. Additionally, exposure to macroeconomic volatility in key emerging markets resulted in financial losses, underscoring the company’s vulnerability to external risks.

Based on the notional gains, valuation downside and price action stance, a "Sell" recommendation on dLocal Limited (NASDAQ: DLO) has been given at the closing market price of USD 15.66 as on 15 August 2025.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 15 August 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.