dLocal posted its best quarter ever last week. Q4 revenue hit $338 million, up 65% year-over-year, blowing past the $297 million analyst estimate by 14%. Full-year revenue crossed $1 billion for the first time. Net income came in at $197 million. Total Payment Volume grew 70% in Q4 to $13.1 billion. That’s four consecutive earnings beats — and the stock is sitting at $12, roughly 28% below its 52-week high.
Here’s the question worth asking: is the market making a mistake, or does it know something the bulls don’t?
What dLocal Actually Does
DLO is a Uruguayan fintech that solves a genuinely hard problem: getting paid in emerging markets. If you’re Spotify, Netflix, Uber, or any other platform trying to collect payments from users in Brazil, India, Nigeria, or Argentina, you can’t just run a Stripe integration and call it a day. Every market has its own local payment rails — Pix in Brazil, UPI in India, mobile money in Kenya. DLO connects to all of them.
The business model is a cut of every transaction processed, called the “take rate.” They operate in 44 markets across Latin America, Africa, and Asia. Their clients are the biggest digital platforms on earth, which is both the strength and the weakness of this business.
The Bull Case
The numbers that matter are all pointing in the same direction.
Total Payment Volume hit $41 billion for the full year, up 60% year-over-year. Q4 alone was $13.1 billion, up 70%. This isn’t manufactured growth — it’s the core metric of a payments business, and it’s accelerating.
Customer retention is extraordinary. TPV retention came in at 158% and net revenue retention at 145%. Translated: their existing customers grew so much in 2025 that they generated 58% more payment volume than they did the year before. That’s a flywheel — as platforms grow in emerging markets, dLocal grows with them.
Free cash flow is real. Adjusted FCF hit $191 million for the year, up 110% year-over-year with a 97% conversion ratio. They’re printing cash. In Q4 alone, FCF doubled year-over-year to $65 million with a 117% conversion ratio.
The valuation doesn’t match the growth. At $12, DLO trades at a forward P/E of 14.2x. Their closest comps — Adyen, EVERTEC, Nuvei — trade at 25–40x forward earnings. For a company growing revenue 60%+ annually with a 35% return on equity and expanding EBITDA margins, 14x is cheap. Nine Wall Street analysts cover the stock: seven Buy, two Hold. Consensus target is $17–$18, roughly 50% upside from here. JP Morgan maintains Overweight with an $18 target as of February 2026.
New products are expanding the TAM. DLO launched Buy Now Pay Later across six countries in 2025 — growing 80%+ quarter-over-quarter, though management is clear it won’t be P&L material until 2027. They also rolled out a full stablecoin suite for cross-border payments. Not moonshots — BNPL and stablecoins solve real friction in emerging market transactions.
Capital return is real. The board authorized a $300 million share repurchase program — that’s roughly 8.5% of outstanding shares at current prices — and confirmed a dividend policy paying 30% of prior-year free cash flow.
The Bear Case
Four things keep this stock cheap, and they’re all legitimate.
Customer concentration is the biggest risk. DLO’s top 10 customers represent the majority of revenue. Lose Uber in Latin America or have Spotify renegotiate their contract, and the numbers look very different very fast. Management doesn’t break this out clearly in filings, which is a yellow flag.
Take rate compression is the structural headwind. DLO’s gross profit grew 37% in 2025 — well below the 60% TPV growth rate. That gap is the take rate getting squeezed. As DLO processes more volume with large, established merchants, those merchants have pricing power. Volume growth and new products need to offset per-transaction declines indefinitely. So far it’s working, but the margin for error narrows every year.
Argentina is a wildcard. Management called Argentina a “highly attractive market” — which is true, but Argentina also has a documented history of currency crises, capital controls, and economic whiplash that can wipe out emerging market gains in a single quarter. DLO hedges FX exposure, but operational risk in frontier markets is real and hard to model.
The chart hasn’t confirmed anything yet. DLO hit $16.78 in late 2025 and has been grinding lower since. The key technical level is $14 — a break above there would signal sentiment is shifting. It hasn’t happened. The stock has made 48 moves greater than 5% in the past year. If macro turns against emerging markets, the downside scenario is ugly.
The 2026 Setup
Management guided for 50–60% TPV growth in 2026. Hit the midpoint and you’re looking at $60–65 billion in TPV. At a maintained or slightly compressed take rate, revenue could land in the $1.5–1.6 billion range, with FCF potentially exceeding $300 million.
The consensus model projects $1.7 billion in revenue and $346 million in earnings by 2028. If that materializes, buying at 14x forward earnings is paying growth-stock money for a value-stock multiple. The 2026 catalyst to watch is new merchant adds. Management was explicit on the earnings call: 2026 growth comes from merchants entering new countries and a stronger new-add cohort, not just existing customers growing. If that holds, the take rate compression story starts looking less threatening.
How It Stacks Up
DLO fits a pattern we’ve seen repeatedly on this site — high-growth companies beating estimates with stocks priced like the market doesn’t believe the story. The Planet Labs analysis from earlier this month showed the same dynamic: strong Q4 beat, $900M backlog, stock trading 60%+ off highs. Credo Technology was the same playbook — 201% revenue growth at 14x forward earnings, market treating it like a melting ice cube.
It also rhymes with the Babcock & Wilcox setup: the stock lagging fundamentals because of a lingering trust deficit from prior misses. DLO had its rough stretch in 2022–2023 when the growth story got questioned hard. Four consecutive beats haven’t fully cleaned up that hangover.
The Verdict
DLO at $12 is compelling. The fundamentals are the cleanest they’ve ever been: $1.09B in revenue, $197M net income, $191M FCF, 70% Q4 TPV growth, 35% ROE, and a board that’s authorizing $300M in buybacks because they think the stock is cheap too.
The risks are real — customer concentration, take rate pressure, and Argentina mean this isn’t a sleep-well trade. The chart hasn’t turned yet. The 50% upside to analyst targets assumes the market actually closes the valuation gap, which it’s been reluctant to do.
But at 14x forward earnings with 60% revenue growth and $191M in free cash flow, you’re buying one of the best-executing fintechs in emerging markets at a multiple that implies the growth stops. That’s the bet. If the 2026 guidance comes through — 50–60% TPV growth, new merchant adds, BNPL scaling toward 2027 — this trade looks obvious in hindsight.
Compelling at $12. The $17–$18 analyst target becomes the ceiling, not the floor, if take rates compress faster than expected.
This is not financial advice. I hold no position in DLO. Do your own research.