DLocal Limited (DLO) Q4 2025 Earnings Report, Transcript and Summary

Good day. Thank you for standing by. Welcome to the dLocal Fourth Quarter 2025 Results. [Operator Instructions] Please be advised that today's call is being recorded. I would now like to hand it over to the company for opening remarks.

Good afternoon, everyone, and thank you for joining the fourth quarter 2025 earnings call. If you have not seen the earnings release, as always, a copy is posted in the financial section of the Investor Relations website. On the call today, we have Pedro Arnt, Chief Executive Officer; Guillermo Lopez Perez, Chief Financial Officer; Christopher Stromeyer, SVP of Corporate Development; and Mirele de Aragao, Head of Investor Relations. A slide presentation has been provided to accompany the prepared remarks. This event is being broadcast live via webcast, and both the webcast and presentation may be accessed through dLocal's website at investor.dlocal.com. The recording will be available shortly after the event concluded. Before proceeding, let me mention that any forward-looking statements included in the presentation or mentioned in this conference call are based on currently available information and dLocal's current assumptions, expectations and projections about future events. While the company believes that our assumptions, expectations and projections are reasonable given currently available information, you are cautioned not to place undue reliance on those forward-looking statements. Actual results may differ materially from those included in dLocal's presentation or discussed in the conference call. Forever reasons, including those described in the forward-looking statements and Risk Factors sections of dLocal's filings with the Securities and Exchange Commission, which are available on dLocal's Investor Relations website. Now I will turn the conference over to dLocal. Thank you.

Good afternoon, everyone, and thank you for joining us today. 2025 was a year of exceptional execution, one that proved the strength of our business as we continue to build a world-leading financial infrastructure platform for emerging markets. Our business flywheel is accelerating. High growth in a massive and expanding TAM, strong customer loyalty and retention, a growing capacity to innovate and an asset-light high cash conversion financial model. We demonstrated the scale of the emerging market opportunity. Our TPV reached $41 billion, up 60% year-over-year and accelerating as the year progressed. Revenue crossed the important milestone of $1 billion for the first time. We continue to deepen our merchant relationships. TPV retention reached 158% and net revenue retention, 145%, both strong testaments to the value of the service we offer and our ability to ride the secular waves of emerging market growth alongside our merchants. We also continue to advance our developing innovation engine. Buy Now Pay Later fused products are now live across 6 countries with solid merch adoption. We've completed the launch of our full-service stablecoin suite, enabling merchants to on- and off-ramp fiat to stablecoins, settle and be settled in stablecoins and collect at checkout in stablecoins. And we continue to add an ever-growing portfolio of APMs, a SmartAPM platform. We also delivered strong cash generation in the year that ended adjusted free cash flow was $191 million, up 110% year-over-year with a 97% conversion ratio, all this strength in our P&L was driven primarily from our sustained TPV growth with merchants in 2025. Flowing on from TPV growth, gross profit grew 37% year-on-year. And despite a still active investment year, we expanded adjusted EBITDA as a percentage of gross profit by 5 percentage points, underscoring the operating leverage inherent in our financial model. As a consequence, net income reached $197 million, up 63% year-over-year. Taking a step back, it's important to acknowledge the consistency of our TPV growth over our entire history. From 2020 to 2025, TPV has grown at an 82% compound annual growth rate. It hasn't really decelerated that much when we see 60%-plus growth in 2025. At the size we have today, these high levels of growth drive significant incremental dollar volumes. Case in point, in Q4 2025 alone, we added more TPV quarter-over-quarter than in the prior 3 quarters combined. The scale of this is worth pausing to reflect on. In 2025, we processed in a single day what we processed in all of 2016. Over the year, we handled approximately 3.5 billion pay-in transactions which is equivalent to around 6,700 payments every minute, every hour of every day. On the payout side, more than 100 million individuals received a payment through dLocal. And so despite it still being the early days for our company, this kind of scale sets us up well for competitive advantage in costs, operating leverage data accumulation and organizational knowledge. We now process payments in 44 markets across the Global South, nearly doubling our footprint over the last 5 years. With an increasing number of markets becoming meaningful contributors to overall volume, 2025 also represented acceleration in financial metrics. When we compare our 2021 to 2024 gross profit, adjusted EBITDA and net income against our 2025 growth rates, the sustainability of high levels of growth at much larger size is clear across every line. The business continues compounding solid growth even as it scales, and there's a reason for this. Merchants are increasingly global, but financial infrastructure remains local and ever more complex and locally regulated. Emerging markets continue to be defined by fragmented payment infrastructure, regulatory complexity and rapidly evolving localized consumer behaviors. The structural challenges are exactly why our platform exists and has such wide adoption among the world's most successful digital companies. We address complex financial infrastructure challenges that our merchants lack expertise in and prefer not to focus on. And there is still room to continue doing this for a very long time. I'd like to share a few examples of such complexity. We now hold 37 licenses across 26 markets, adding 4 in 2025 alone, including Argentina, Chile, the UAE and the Philippines, with 16 additional applications in process including for the United States. Without these, serving customers with the local financial infrastructure that their consumers expect would not be possible. Alternative payment methods already account for the majority of e-commerce volumes across EM markets. And our APM volumes continue to grow as we deepen capabilities around tokenization, biometrics, improved regulatory compliance and increasingly offer instant rails being built across the Global South. On stablecoins, we've offered a full suite of stablecoin solutions for merchants. And on AI agents, a possible new frontier for commerce, we are collaborating with Google on the AP2 open standard for interoperable AI engine payments to ensure local payment methods across emerging markets are part of that infrastructure for the ground up. Most importantly, we simplify and abstract away all this complexity through a single, unified, world-class platform. Our ability to offer one integration covering the widest and deepest footprint across the Global South, the most markets, the most payment methods per market is our durable differentiator. That is the One dLocal proposition. And the more complex the environment becomes the more valuable it gets. I think it's worth highlighting a few examples from this last quarter alone that exemplify what I've been talking about. On stablecoins, we now offer merchants a complete infrastructure suite for digital assets from treasury and effects through on and off ramps all the way to stablecoin acceptance at checkout and settlements in stable with leading partners, including Circle, BVNK, Fireblocks and Felix. On Buy Now Pay Later, our Fuse product grew 88% quarter-on-quarter during the fourth quarter. a clear signal that merchant and consumer appetite for installment-based payments is real and rapidly accelerating. And on alternative local payment methods, we continue expanding depth and intelligence across markets and use cases to deliver improved performance; from biometric authentication and tokenized card on file to instant payment rails, DHL Express and Open English are among the latest merchants to go live with these capabilities. APMs currently account for a significant portion of our quarterly TPV. The value to our existing merchants of the product and service model we offer becomes clear when looking on our retention metrics. As merchant rides the secular trends in our markets, scale into new geographies and adopt new payment methods or expand them into new use cases, dLocal grows with them. This is the compounding nature of our model reflected in our TPV retention rate and net revenue retention. Equally important to our growth algorithm is the size of the market we are pursuing. Estimates place the total addressable market for digital payments across the urging markets at over $2 trillion and expect it to double by 2030. And we currently hold the less than 2% of that market, while our share of wallet with existing merchants is only approximately 10%. We're scaling fast and yet the runway ahead remains enormous. This dynamic is also visible in the breadth and depth of our merchant base. Total merchant count reached more than 760 in 2025 and the diversity of that base continues to increase. Revenue concentration in our top 3 markets has declined. And our top 10 merchants account for a lower share of total revenue than in the prior year, reflecting broader platform adoption across geographies and verticals. And while admittedly, concentration remains, the business has become not only increasingly diversified, but also stickier. Today, we serve our top 50 merchants across an average of 12 countries and 50 payment methods. That multi-country multi-payment method engagement is the clearest expression of the resilience and compounding nature of what dLocal has to offer. All along, these results have been delivered with best-in-class efficiency. Our gross profit per employee has improved despite continued investment levels, with AI and automation as growing key enablers. In 2025, AI-driven automation delivered the productivity equivalent of roughly 7% of total headcount, allowing us to scale without proportional cost increases. More importantly, we expect further progress throughout this year. We have a clear self-reinforcing logic to our business model. high growth drive scale, scale drives efficiency and efficiency generates the cash we reinvest to extend our lead or generate greater shareholder returns. This continued our track record of strong cash generation, which positions us to reinvest in technology product and commercial capabilities, while maintaining sufficient liquidity and returning capital to shareholders. As previously announced, I'm very pleased to have Guillermo Lopez Perez, on board as our new Chief Financial Officer. This will be Guillermo's first earnings call in the role and we're all very excited to have him leading our finance organization. And so with that intro, let me hand the call over to him.

Thank you, Pedro. I am thrilled to have joined dLocal and report of this team's next chapter, and good afternoon, everyone. As I shared with some of you in London a few weeks ago, the opportunity ahead of dLocal is enormous. And the business this team has built over the past 10 years is exceptional. I look forward to having more conversations with you in the coming months about how we are strengthening and scaling dLocal. So Pedro walked us through some full year results. Let me focus on our performance in the fourth quarter. TPV surpassed $13 billion for the quarter, growing 70% year-on-year and 26% quarter-on-quarter. This is our highest quarterly volume in dLocal's history and our fifth consecutive quarter of above 50% year-over-year TPV growth, a sustained trend that reflects the strength and consistency of our business. As you can see as well, we are exiting 2025 with very strong momentum in TPV growth. This growth was broad-based across our key markets and verticals. It was particularly strong in Brazil, in Mexico, South Africa and Colombia. On the vertical side, on-demand delivery stood out in the quarter, driven by existing merchants ramping up expansion deals across Argentina, South Africa, Mexico and Colombia. E-commerce continued its positive trajectory, delivering a seasonally strong quarter, particularly in Mexico, Brazil and South Africa. And advertising recovered quarter-on-quarter, supported by the partial return of volumes in Egypt. Q4 was a strong quarter to finish the year as well from both a revenue and gross profit perspective. Revenue reached an all-time high of $338 million, up 65% year-on-year and 20% quarter-on-quarter, demonstrating that our TPV momentum is translated into very strong top line performance. Gross profit reached $116 million, up 38% year-on-year and 12% over Q3. It reflects the natural margin pressure dynamic of scaling volume with established merchants and into new payment methods, products and countries. But even with that natural margin pressure, we added $32 million of gross profit year-over-year in the quarter, nearly a 40% growth. On a sequential basis, besides higher local-to-local volumes and the typical Q4 enrollment seasonality, the gross profit story was driven by 5 main contributors. Brazil led the growth where we saw very strong seasonal e-commerce growth, supported by solid trends across streaming, advertising, financial services and remittances. Egypt partially recovered versus Q3, reflecting the return of a large merchant and the ramp-up of new e-commerce streaming and ride-hailing metals. Mexico contributed thanks to a strong volume growth in e-commerce, on-demand delivery and ride hailing and Other Africa and Asia contributed with broad-based growth, with a notable contribution from South Africa, where we are increasingly operating with more global merchants. Argentina, on the other hand, was the primary drag to growth. While underlying volume growth was very strong, gross profit was held back by higher cost amid election-related FX and rate volatility. Q4 continued to demonstrate the operating leverage inherent in our business. Total operating expenses were $53 million for the quarter, up 28% year-on-year, driven primarily by our investment cycle related head count growth and higher average salaries following our merit cycle. Adjusted EBITDA reached $78 million, up 38% year-on-year and 9% quarter-on-quarter. Starting 2026, we are introducing operating profit to provide investors with greater transparency into our operating performance. As the business scales, adjustments represent a declining share of revenue and we believe this metric offers a more standardized basis for comparison with industry peers. Net income totaled $56 million for the quarter, up 87% year-on-year. and 7% quarter-on-quarter. Year-over-year growth reflects a lower effective tax rate in the quarter, driven by a more favorable jurisdictional mix and the nonrecurrence of a onetime tax settlement recorded in Q4 of last year. Return on equity reached 35% on a last 12-month basis, up 10% points year-over-year and continued on to increase every quarter. The improvement in ROE reflects both a stronger profitability and the effects of our capital return policy, mostly the inaugural dividend payment in 2025. Finally, adjusted free cash flow for the quarter was $65 million, doubling year-over-year with an adjusted free cash flow to net income conversion ratio of 117%. The quarterly conversion can fluctuate with items like tax payment timing. But on a full year basis, we converted close to 100% of net income into free cash flow. This is a business that converts growth into cash at an exceptional rate. With that, I'll pass it back to Pedro, who will speak to how we are deploying this strength.

Thank you, Guillermo. 2025 confirmed what we've long believed. The opportunity in emerging markets is massive our model is the right one to capture it, and our team executes consistently across a complex and dynamic environment. We enter 2026 with a clear strategy, a strong platform and a proven track record. This year also marks 2 milestones, 5 years as a listed company and 10 years since our finding, a reminder of how far we've come in so little time and how much of the opportunity still lies ahead. Let me turn to our outlook for 2026. We expect continued strong growth in the key market share and product market fit measurement that is total payment volume. We currently see TPV growth in the range of 50% to 60% year-over-year. Greater volume drives pricing leverage with downstream providers, improves FX liquidity and generates better data that feeds conversion rates. This is the compounding logic that excites me the most about our long-term trajectory in this business. We're guiding for gross profit growth of 22.5% to 27.5% year-over-year. As existing merchants grow and large clients continue to scale, we expect more volume-based discounting that is embedded in our long-term customer relationships. At the midpoint, this implies gross profit dollars, what we managed to of $0.5 billion in the year. On profitability, we are guiding for operating profit growth of 27.5% to 32.5% year-over-year. Following a 2025 investment cycle, which has overhang into early 2026 as salaries and wages spend from '25 hirings gets annualized, we expect operating leverage acceleration to become evident more towards the second half of the year and then flow into the following year. As a reminder, emerging markets remain inherently volatile, and our projections reflect those uncertainties. These conditions are not new to us. We've built this business to navigate exactly this kind of complexity, and we remain confident in our guidance. We believe we are only scratching the surface of the opportunity ahead when I take a longer-term view. So I wanted to leave you with a way of thinking of that opportunity further into the future. First, the growth of our existing merchants in markets where we serve them today. The world-class companies we serve are riding some of the strongest secular trends: digitization, middle-class income growth and e-commerce penetration. In many cases, there are entire lines of businesses for which they have not yet localized their payments infrastructure. Second, geographic expansion with existing merchants. We serve merchants across an average of 12 countries today, but we operate in over 44. Further expansion into Asia, the Middle East and Africa where we see increasing merchant interest will be an even greater growth vector going forward. These 2 elements are what will drive increases in our consolidated share of wallet of our existing merchants. And they also explain why we expect continued high TPV retention rates with these merchants. On top of that, our growth will be powered by new merchants. Our last 2 years have been predominantly driven by the strength of our existing base. However, we're seeing strong commercial traction with new merchants across priority verticals such as travel, crypto, gaming and AI as they move further along the emerging market payment adoption curve. We expect new merchant contributions, therefore, to increase over the medium term. And fourth is our innovation engine. While near-term P&L impact is still expected to be modest we see multibillion TPV opportunities in our wider financial infrastructure bets such as Buy Now Pay Later, enhanced merchant of record solutions, virtual accounts and our soon-to-launch card-present offerings. Finally, and before I close, I'd like to cover capital allocation. We continue to have enormous confidence in the cash generation capacity of dLocal. The asset-light nature of the business, negative working capital requirements and potential for operating leverage ahead of us gives us a growing free cash flow profile even under conservative projection scenarios. In addition, we currently operate with minimal debt. And while we remain disciplined do not rule out using it in the future as a way to secure additional cash or enhance the efficiency of our capital structure. Our allocation framework is structured around 4 priorities: first, invest to sustain high levels of growth that we aspire to; second, ensure the appropriate liquidity buffers given the volatility of the markets where we operate; third, selectively be prepared for M&A if it accelerates our strategy; and fourth, return excess capital to shareholders. On this last point, through the end of 2025, we have returned 64% of adjusted free cash flow generated since 2022 to our shareholders. We intend to maintain this disciplined approach to capital returns going forward. Consequently, we're confirming our dividend policy of 30% of the prior year's free cash flow, which this year translates to $57 million. Additionally and upon thorough analysis and consultation, we believe that our business will generate sufficient cash in the medium term beyond our minimum liquidity requirements and dividend policy commitments. This allows us to increase returns to shareholders. As a result, the Board has approved a new share repurchase program of up to $300 million of our Class A common shares. The policy is a first step in what should become a multiyear capital allocation model that combines the predictable discipline of our diligent policy with add-on allocations for share buybacks that will prove accretive to EPS. The precise quantum of these plans will be determined by multiple factors. Among them, trading volumes to ensure the adequate liquidity for our shares, continued confidence in excess free cash flow generation and analysis of the potential for other areas of investment that can generate even higher total shareholder returns. We trust that these corporate finance decisions and programs highlight our commitment to be prudent allocators and custodians of your capital as shareholders in dLocal. And now finally, these are turbulent times. So to close, I want to highlight what makes our story special and more importantly, durable. We have a business that is growing rapidly highly profitable on a cash basis with low leverage and high and increasing return on equity. That combination of growth, profitability and financial strength is where as a team, we remain fully focused on the lung game, disciplined growth, continued product innovation and sustainable value creation for our merchants and our shareholders. The opportunity across the emerging market landscape is vast. Our platform is uniquely positioned to capture it. and our track record gives us confidence in our ability to continue to execute against this strategic vision. Thanks, everyone, for your continued support, and we can now open the call to take your questions.

[Operator Instructions] Our first question will come from the line of Tito Labarta from Goldman Sachs.

A couple of questions, I guess, to start. First on the TPV growth guidance, as you mentioned, Pedro, you have continued strong opportunity for growth there. Just if you can give a little bit more color on where you're seeing the growth come from this year? Is it a continuation of like Brazil, which has been growing quite a bit more in Africa. Just any color that you can give on where you think the PPV growth will come from by country, by vertical, like e-commerce has been strong. Any color on that, I think, would be helpful. And then my second question, specifically on the quarter, in Argentina, we saw actually very good revenues. Gross profit were lower. I mean, I think you mentioned FX and some other things impacting costs. But how do you think about the gross margin in Argentina? Should we think of this as a one-off this quarter given everything going on there? And should that gross margin sort of recover to levels that we saw before? Just to think about the growth that we can expect, not just on revenues, but also gross profit for Argentina.

Great. Thanks, Tito. I'll take the first one. I'll leave the second one to Guillermo. So the strength of our business continues to be broad-based in terms of the guidance. Latin America will continue to deliver strong growth. We consolidate our position further in Africa with some critical markets there, sustaining growth. We've seen Egypt pick back up in the fourth quarter, and we assume that, that rolls into the '26 guidance. And we're also becoming increasingly ambitious in the Middle East and in Asia, where, despite being a late entrant we do see significant opportunity and will lean into that market as a long-term growth vector. The other part that we indicate, if you look at Page 27 of the slides is we also begin to see increasingly a better distributed set of growth vectors in the guidance, whereas our '25 results were extremely concentrated on share of wallet gains and organic growth of our existing merchants in existing countries. When we take our bottoms-up approach and probability adjust our pipeline to get to the 26% guidance numbers, we begin to see more participation coming from taking those merchants into new countries, which shows the depth of the relationships we're building and also the growing importance of frontier markets and smaller markets within the emerging world footprint as well as our expanding footprint into more parts of the globe, for example, Asia, as I just mentioned. And then also, we expect a pickup in new merchant impact in year 1. So a very strong cohort. And finally, still small, but I think if we take a midterm view, a very, very important part of what we're building are our new products. which allow us to further monetize and gain traction with our merchants. And more importantly, many of these ideally also become take rate accretive because they are higher monetization products.

Okay. So, let me take a start to your question on Argentina and feel free, Pedro, to chime in. So Argentina had a significant rate in FX volatility leading into the elections in Q3. I think this macro volatility was already mentioned in the previous earnings. Unfortunately, we show it remained elevated throughout Q4. which affected the cost of the funding sources that we use for our attachment business. But I think on a positive note, we continue to see very strong volume growth and Argentina remains a highly attractive market for us. It is one of our fastest growing countries. And when we calculate the returns on capital deployed really well above our cost of capital. So our thinking on Argentina, it is high growth, high return market despite this increasing volatility that we have seen.

Okay. Very helpful, Pedro and Guillermo. If I can, just a quick follow-up on each. So we should expect that gross margin, which kind of suffered from the FX volatility as the FX normalizes, that should recover maybe closer to what we were seeing in the past. Is that correct for Argentina? And then Pedro, just curious on the stablecoin by now, I'll say later, I mean you mentioned those as opportunities. When do you expect those to become a sort of like significant contributors you expect already in '26? Is it more a '27, '28 story? just to think about the potential there? And what can -- how much that can contribute?

So '26 is more about the confirmation of product market fit and solid growth we gave an idea of quarter-on-quarter growth and Buy Now Pay Later above 80%. Now obviously, coming from a small base, so it still doesn't move the needle, unlikely that it moves the needle in 2026 but compounding at those levels of growth sequentially by 2027, ideally, that does become material in our P&L. And then on Argentina, we'll comment on how the market evolves when we get into it. As you know, Argentina is a particularly volatile country. I'd rather not be making forward-looking statements. I think Guillermo's point was, if we abstract ourselves from the short term, we look at TPV growth, we look at merchant interest in the country. We look in general at a country that seems to be on the right track. We expect a lot out of Argentina over the long term.

Our next question will come from line of Guilherme Grespan from JPMorgan.

Congrats on the quarter, very strong print. Two questions on my side. The number one is just on stablecoins. You mentioned a little bit on stablecoins by an operator APMs, but specifically on stablecoins. If you're seeing any pickup, Pedro or not in the volumes of table point, I think on the treasury of dLocal makes more sense, maybe it's picking up. But my interest is more on the pains and kind of adoption in if we're seeing any signal that stablecoins technologies already picking up in some way? And then my second question is just to check the box on United States license, should we read this as a U.K. license similar to that movement? Or it's specific to any service or product here?

On stablecoins, we are not seeing significant volumes or pick up in stablecoin at checkout. We do begin to see growing interest in merchants and understanding the product that we've come to market with, understanding regulatory requirements and how each market works but I would not say we've seen volume. Where we're seeing the most volume within that vertical is serving digital asset marketplaces exchanges with the legs on the way in and the way out, so what we call pay-ins and payouts. And then increasing and growing conversations with corporate treasuries and our clients' treasuries on the usage of stablecoins in particular markets where they may have a cost benefit or a speed benefit or a 24/7 settlement benefit, which I think over the next few years, will probably be the largest of those 3 segments that we offer products around, which is stablecoins as a payment means or settlement means, stablecoin on and off ramps to fiat and corporate treasury adoption.

That's clear.

There's a second part to this question or a second question, which was on U.S. licenses. We continue to be solely focused on the emerging market global footprint. As I said, we're very excited in our forays into the Middle East and Asia. So there's not an ambition here to offer developed market solutions. We see our strength and our differentiation and our ability to leverage over 10 years of building infrastructure, and pipelines across the emerging world. Those licenses just facilitate settlements to merchants and simply allows us to operate on our own licenses in an increasing compliant way rather than have to rely on licensed partners.

Now for our next question will come from line of Pedro Leduc from IBBA.

Congratulations on the strong close of the year. First question on Brazil revenues and gross profits. Gross profits growing much faster than revenues here this quarter. I was wondering if you could detail to us a little bit, if it's product mix, client mix? Second, if you want to develop a little more on what dragged up the G&A expenses this quarter. And there's a comment in the prepared remarks that operating leverage should kick in, in the second half of the year you see it protrude within the profit and gross profit guidance. But if it's something that we should also expect the 4Q level to be still upon us here in this first half of the year? And if I may squeeze on the third. Just to clarify, I think there was a comment about present card operations going forward, if you want to detail a little bit more about that.

Okay. On Brazil, I would say, in general, Brazil really has begun to rebound. If we look at the TPV growth, it shows this tremendous strength in that market. And then Brazil also benefited from very strong monetization A portion of that is it's one of our largest markets. It's where we have a lot of TPV from mid-tiered merchants, which typically have slightly higher take rates. The vertical mix there with advertising performing well, that usually tends to be a slightly higher take rate. But it was a particularly strong quarter. I don't think that level of dispersion between TPV growth and gross profit growth is something that you should necessarily project into the future. So very strong in general, structurally strong really glad to see Brazil turnaround after a difficult '24. There's also an easy comp to a certain extent, but I think mission accomplished by the team there. We always said that we were confident that '24 was more about volatility and that there was still significant growth for us ahead in Brazil. It was particularly strong. I don't think that kind of strength necessarily should be extrapolated into the future. On G&A, very quickly because I think we tried to explain this, but important to understand the cadence into the quarter. If you look at our year, A lot of the growth in head count within our investment cycle was more backloaded to the second half of the year than the first half, not necessarily by design, but the way it played out. So what you're seeing there is very much driven by increased investment in engineers, in commercial teams and in operational teams. And that does have a spillover into 2026. I'll let us Guillermo cover that, but I think it's relevant.

Yes. I think you asked specifically about G&A, I mean, there were some one-off items, but actually you normalize for them. These nonrecurring at the underlying time on G&A is consistent with what we see in rest of OpEx. And the story of OpEx is on our Q4. It reflects the last leg of the hiring coming out of the investment cycle that Pedro started 2 years ago. We invested mostly in headcount, and there's also a component of our annual merit cycle increases. Now to help you understand how this is going to pan out in 2026, we are not planning to add any significant head count at this point in 2016, beyond a few hirings already mentioned at the end of '25. But given this '25 hiring is back loaded in the year, you should see higher levels of OpEx year-over-year growth in the first few months of and this cost as discussed are advertised. This growth should produce in the later months of 2026. But overall, we expect OpEx growth for the full year to be below gross profit growth, and the operating leverage imparted in our guidance is probably going to be a story for the second half of the year. It is worth noting as well that when you compare us to our peers, as we show in the presentation, we believe we are our own best-in-class in terms of the resources required to run a business of this scale and growth rate. And I think that's a reflection as well of the operating model that we built and very comfortable with the levels we are maintaining.

You had a third part to your question, I didn't jot it down.

There's some mention about card-present transactions that you're going to upgrade? Maybe I misunderstood it, but there's something in the call that mentioned that.

Yes. That's part of our innovation pipeline. I think there are select verticals where we have inbound interest from merchants who would like to use dLocal technology stack embedded in smart hardware and smart POS. So that would be our first foray in being able to capture some share of wallet in card-present processing, which is by far the largest market. If you look at dLocal until today, 100% of the merchants we process are digital merchants, so not card-present transactions. And through this new card-present platform, we'd be launching it would allow us to start having some share of wallet of the card-present market. Still focused a lot on global international merchants, where the advantage of one integration and then being able to deploy that across multiple markets remains unchanged. We're not changing our go-to-market strategy, but it does open a very large addressable market for us.

Our next question will come from the line of Matt Coad from Truist.

Pedro, I just wanted to do one more on the card present offering there. Could you kind of like touch on -- I assume that's more of like a 2027, 2028, even maybe 2029 story. But could you talk about if there's any kind of like upfront OpEx investment in 2026 to drive some of that growth? And then just second question. It seems like the large merchant coming back on board in Egypt is a pretty unique situation, bodes pretty well for dLocal. Could you guys kind of provide a little bit of color there? Like why did you lose share of wallet? And why ultimately did the merger come back to dLocal?

Great. Let's see. I don't want to get too dragged into this card present thing to not make too much out of an embryonic product launch. Everything we build is actually typically very determined by a specific merchant contract that's existing. And therefore, rarely ever do we invest significant OpEx ahead of having concomitant revenues backing it up. And I think this is yet another case where we will build alongside our client. And that allows us to gradually see if there's product market fit and how much more interest there is for what we're building and how much we can grow with that initial merchant. In general, that's one of the reasons we're so encouraged by the cash generation of our financial model is that we don't really make big investments ahead of existing real enterprise merchant demand to fund the build-out of the products. Egypt. I think Egypt, we've walked through this. I think regaining share of wallet is phenomenal. It doesn't surprise us, but losing it in the first place, we explained this was a merchant that we had a 100% share of wallet in. The merchant started rolling out redundancy. And in the initial phases of that redundancy, we lost a significant amount of that share. And through performance, we've gradually been recovering it. We will never return to 100% because the merchant understandably will always have redundancy. But certainly, at least over the last quarter, it's been 1 of recovering a lot of the market share that was initially lost when we moved to 100% to sub-50%.

I think the other thing to add on it is we're diversifying our business with the ramp-up of e-commerce is trimming and right-headed merchants, it's good to have and see that diversification.

Next question will come from the line of Jamie Friedman from Susquehanna.

I appreciate the new disclosures especially Slides 12, 13 and 27. So I want to ask about those. So in terms of the -- so if you don't have it in front of you, the share of wallet analysis on Slide 12, I think, is important. So if I'm reading this right, you're getting 300 basis points of share of wallet increase year-over-year is your estimate from your installed base, if that's right. I'm just trying to reconcile that, Slide 12 with Slide 27. How do we think about the share of wallet contribute to growth going forward and the contribution from new merchants, which you're articulating is expanding next year?

Jamie, so I think you've understood correctly. Slide 12 is an actual breakout of what was driving growth, which then informs the left-hand column of the slide further down. And if you look at '25, our TPV retention was phenomenal. And within that retention, it was very much driven by the growth of our merchants in the markets where we already serve them and share of wallet gains within those merchants in those markets. So think of that almost as the enormous expansion of the existing market we're in, and that's one of the great things about emerging markets is just riding the growth of our business partners as emerging market consumers become more and more digital and consume more and more of these global digital products gives us significant growth. On top of that, as we gain share of wallet in some of these merchants, things play out as they did in '25. What we see in our pipeline for '26 is that we see a pickup in growing into new markets with those merchants, better impact coming from new merchants. So we're beginning to see increasing pickup in new merchants globally looking to localize payments, and so we expect a lot out of the '26 cohort. And then finally, beginning to see, as I said before, product market fit and new products coming to market, whether that is buy now pay later, card-present, virtual accounts, and a few other things we've indicated. If you take a longer-term look, what we'd like is to see new products and new merchants increasingly becoming a bigger and bigger part of the story.

And then if I could just follow up, Pedro. With the new merchant contribution contemplate for '26, Slide 27, 10%, I would have thought that those would be accretive to the gross profit take rate because they probably don't have the volume discounts because they're new. Is that a fair assumption? And because that is a bigger number next year than this year, so why is it that we're landing at like an 80 basis gross profit take rate at the midpoint next year if new merchants are ramping the way that they are?

So I think that's a generalization. And it depends very much on the new merchant and the new merchant potential and the size of their projected volume as well. So if you have the possibility to engage in a conversation with some of these new gen companies that are growing 11x Q-on-Q and convince them to adopt localized payments think you're going to focus on volume there and give them an attractive take rate. So it's not that easy to generalize. And I think more importantly and again, sorry for being so reiterative on this but the more we look at the size of the emerging market opportunity, the more convinced we are that the single most important thing for us is to continue to grow total payment volume to continue to drive to max scale and to not lose merchants or lose accounts on trying to maximize for take rate. at the end of the day at high TPV growth, which drives incremental gross profit dollars and solid gross profit growth with operating leverage, which drives even more solid operating income growth, we get the best of both worlds. Long term, we guarantee that we continue to be one of the scale leaders across emerging markets. And we feel fairly confident that if you have the merchant relationship and you're processing for them, we will figure out ways to monetize those relationships and all that TPV. So focused on TPV growth, focused on gross profit dollar growth and being scale leaders across emerging markets is what's implied in the guidance. not all new merchants that come in necessarily come in at higher take rates. It depends on the vertical, and it depends on the size and the potential of the new merchants. The new products do all tend to be accretive to take rate, but those are still quite small in terms of their impacts in the '26 guidance.

Our next question will come from the line of Neha Agarwala from HSBC.

Congratulations on the results. Just a quick clarification on the OpEx on what I understand you're done with all the hirings that you needed, most of the investments. The reason why the operational efficiency will be visible more in the second half of this year is mostly because of base effect because some of those expenses will be on the first half. right? But most of the investments, the changes that needed to be done, those are already done. We don't have significant investments per se in 2026? And my second question is where do you see upside or downside risk to your guidance? What are the main factors that we should work out for during this year that could bring in volatility or diversion from the guidance that you have provided?

Let me take the first one and hand the second one to Pedro. So you're right, you're thinking about OpEx. We see a lot of the hiring in the second half of this year. There were just a few handles of positions that were open at the time that come in 2026. But from an OpEx perspective, what you're going to see is the annualization of those late in the year hirings budding out in '26. And so you will see that high year-over-year growth in the first few months, and that should normalize and come down in the latter part of the year in which we are predicting a reduction in the level of growth, that's correct.

Great. Let's say, I don't want to give you a trite answer. Clearly, as an emerging market operator, global macro, geopolitical and primarily how that flows through to FX are the clear -- we don't control, we don't know, but they can have an impact on our results. I'd say if we take a more micro approach within the things we do control, probably the largest risk. And this somewhat also answers Jamie question on the take rate implied is there have been some very strong global wins with some of our large merchants. I think the way we like to say it is we feel like we've moved into a new category of partnership with many of the world's leading digital companies where we now are one of the largest global payment processors, operating for them across multiple markets across the emerging world. And the expectation of the delivery on those contracts is a big part of the growth in 2026. So it is guidance that remains concentrated in a merchant perspective, less and less so in a country perspective because we're serving these merchants across many, many more markets and payment methods. But that's probably the biggest risk is that we do have to deliver on these net new adds in terms of markets and payment methods so that we continue to roll out everything that has been jointly agreed to in these large global contracts where we become one of their most important and trusted global financial infrastructure providers.

So I mean, if I put it differently, you said it probably goes upside risk to the volume growth with more of these big wins coming through but your ratio, which is the take rate ratio might get diluted because of that, but because you are very focused on volume growth. as that's the right strategy for the long term?

Gross profit growth, operating profit growth, obviously, earnings above all else and convinced that this is a race to scale as payments and financial infrastructure always are. And that, as I said before, if we have the TPV, we have the merchant relationships as our product portfolio widens, we have that TPV and those relationships to cross-sell new products and also to figure out different ways that we can help our merchants across the markets where we operate with them. So we continue to see take rate as an output metric. The metrics we manage to our TPV growth which reflect market share, share of wallet and how our merchants choose. Remember that TPV for us is revenue for our merchants and then be able to drive gross profit growth operating profit growth and earnings growth as a consequence of that sustained high level of compounding TPV growth.

And with that, this concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.