Ashton Invests
Long-Term Equity Investor, Fundamental Stock Research
dLocal is an overlooked picks-and-shovels play on emerging-market digital payments, combining real growth, real profitability and a huge runway outside the US. In the fourth quarter, payment volume grew 70%, revenue 65%, gross profit 38% and net income 87%. Full-year 2025 revenue crossed $1B for the first time, and adjusted free cash flow rose 110%. x.comÂ
dLocal could be the Adyen of emerging markets, quietly building payment rails for the next billion consumers. It combines 25-30%+ growth, expanding margins and solid 2026 guidance with a surprisingly low valuation. x.comÂ
dLocal remains one of the highest-conviction long-term holdings, a hated moat whose great results drew only a 5% after-hours gain. Per @mvcinvesting, Q4 revenue was $337.9M versus $296.1M expected, free cash flow doubled to $64.7M and payment volume grew 70%. For 2026 dLocal guides 50-60% volume growth and 27.5-32.5% operating profit growth, and it announced a $300M buyback. x.comÂ
dLocal sits in payment processing, a sector that 30 years of data show to be dead because margins are low. Fintech is just software, without the asset leverage that banks have. dLocal fell about 11% after EPS of $0.14 missed the $0.15 estimate, per TrendSpider. x.com x.com x.comÂ
dLocal's payment-volume growth is exceptional, so a declining take rate shouldn't worry investors while TPV and gross profit keep growing this fast. TPV rose 80% year over year in constant currency to $17.7B, the seventh straight quarter above 50%, and TPV and gross-profit guidance were raised. Net take rate fell to 0.72% from 0.84% as lower-margin local-to-local volume grew 141%, and Asia and Africa look weak. Management focuses on growth over take rate, though some slowdown would be welcome. … Show more
dLocal still looks very early because it holds only about 10% wallet share with its merchants, versus 50-80% in a mature relationship, per dLocal's Pedro at the Goldman Sachs conference. The average merchant uses dLocal in about 12 of its 60-plus markets, up from 8. Take-rate compression is the key issue; if it slows as Pedro expects while TPV keeps growing, gross profit and free cash flow should improve sharply. Only about half of today's top 10 customers were there two years ago. x.com x.comÂ
dLocal faces stronger competitors and margins that will keep falling. Many of its regions are a constant uphill battle; even if it does well long term, payments stocks are uninvestable. x.comÂ
dLocal's business is materially better than in 2021, yet its valuation is far lower. It now generates nearly as much gross profit in one quarter as it did in all of 2021, while its market cap is $4B against a $20B peak in 2021. x.comÂ
dLocal's diversified model makes its sharp selloff look unwarranted. x.comÂ
dLocal's take rates face merciless, structural pressure from regional competition and market structure. Management, by contrast, expects only an asymptotic take-rate decline and nothing structural. The stock fell 8% after Q1 earnings. x.com x.com x.com x.comÂ
Visa's volume and earnings growth show its network benefits from the global shift to digital payments. FY revenue rose 15% to $45.9B, adjusted EPS 16%, payments volume 9% and cross-border volume 13%. One of the world's highest-quality businesses, it is among the few most comfortable to hold for the next decade. Adjusted operating expenses rose 16%, ahead of revenue; client incentives rose 16% to $18.3B but threaten margins only if they get out of control. Regulation and litigation remain risks. … Show more
