DLocal Limited

Good day, and thank you for standing by. Welcome to the DLOCAL first quarter 2024 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference may be recorded. I would now like to hand the conference over to your speakers today. Please go ahead.

Good afternoon, everyone, and thank you for joining the first quarter 2024 earnings call today. If you have not seen the earnings release, a copy is posted in the financial section of the Investor Relations website. On the call today, you have Pedro Arndt, Chief Executive Officer, Mark Orritz, Chief Financial Officer, Maria Oldham, SVP of Corporate Development, Investor Relations and Strategic Finance, and Soledad Neger, Head of Investor Relations. A slide presentation has been provided to accompany the prepared remarks. This event is being broadcast live via our webcast, and both the webcast and presentation may be accessed through D-Local's website at investor.dlocal.com. The recording will be available shortly after the event is 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 D-Local'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 this conference call for a variety of 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 in D-Local's investor relations website. Now I will turn the conference over to D-Local.

Thanks everyone for joining us today. 2024 has gotten off to a contrasting start. The year started with us once again posting record quarterly TPV of $5.3 billion, a growth of nearly 50% year on year. This TPV growth was solid across multiple verticals, with e-commerce nearly tripling in size, remittances practically doubling, and ride hailing, softer as a service, each growing north of 50% year-on-year. This is all a testament to the value of our solution that we offer merchants in varying verticals and of our increasingly strong competitive position and sustained share of wallet gains. We believe that nothing will set us up better for long-term success than this kind of sustained TPV growth compounding over multiple years. As we move down the P&L, the quarter is less of a clear-cut success than our TPV growth indicates. We delivered solid revenue growth north of 30% year-on-year, while gross profit growth was flat, leading to a declining adjusted EBITDA. Mixed results during the first quarter are explained by a few relevant drivers I want to make very clear. First, we saw one of our largest merchants achieve a new level in our tiered pricing scheme and also renegotiate fees as their contract came up for renewal. Given the still high concentration on top 10 merchants that the business has, such a renegotiation directly impacts revenue growth. Second, product mix shifted towards lower monetizing payout volumes as core pay-in verticals such as e-commerce and advertising are typically seasonally weaker in Q1. Additionally, a few important new launches that were scheduled for the first quarter were delayed by our merchings, something that we don't control and slowed down anticipated volume ramp-ups that should have offset those declines in take rates caused by the above-mentioned events. And then finally, we decided to sustain our planned investment increases that support long-term growth, even at the current gross profit level. We have confidence that gross profit will eventually rebound and see these OpEx investments in capability building, internal mechanisms, and technology as strategic for our long-term success. Trend-wise, performance got better as the quarter progressed, with a weak first two months of the year totaling $37 million in gross profit, while March GP came in at $25 million, which is above Q4 levels. Marie and Mark will take you through greater detail on the Q1 details in just a second, but let me first spend some time providing an update on our execution against our priorities. Our cross-border businesses returned to 9% quarter-on-quarter growth and hit a new record of $2.4 billion in TPV during Q1. This after witnessing declining growth in the fourth quarter driven by, among other things, the temporary slowdown in cross-border transactions in Argentina we walked you through last quarter. Cross-border remains the core of our value prop, and seeing a return to sequential growth is a very positive indicator. Local-to-local processing business, despite being flat queue-on-queue, again driven by seasonal effects, delivered TPV growth at nearly 80% year-on-year. The continued success of our local processing dispels one of the structural concerns that existed about our business. It confirms that our world-class orchestrating offering, where our AI-powered smart routing is able to optimize traffic routes to deliver higher conversion rates, the robust fallback and redundancy that it offers, the efficient prod prevention engines we incorporate, and best-in-class KYC and compliance layer as well as merchant-specific features offer our global merchants a superior product and service offering to what they can receive through the direct integrations they could otherwise pursue to local acquirers. The investments we've made in adapting our infrastructure to meet the needs of global remittance partners and marketplace merchants is also paying off handsomely. Our payout business grew by 17% Q on Q and over 50% year on year. The quarterly pickup is particularly interesting and driven by a strong Q1 ramp up in remittance corridors that we can offer our partners. This growing number of corridors not only represents an interesting vertical in itself for us, but it also generates opportunities for cross-border growth in pay-ins as it improves our liquidity and pricing that we can offer our merchants. In addition to continuing to evolve our product offering across our businesses, cross-border, local, pay-ins and payouts, during Q1, we also maintained our commitment to making efficient and disciplined investments in key capabilities, including growing our licensed portfolio, deepening our relationships with global banking partners, and ramping up our operations and back-office effectiveness. During the quarter, we were granted licenses in a strategic market such as Egypt and new payment operator registrations in Argentina, Ecuador, the Dominican Republic, and Kenya. We continue to believe our growing portfolio of regulatory approvals will constitute an increasing competitive advantage as our global merchants seek to navigate the complex regulatory environments in emerging markets. With that, let me hand it over to Maria to take you through a more detailed overview of these first quarter results.