DLocal Limited

Good day. Thank you for standing by. Welcome to the D-Local fourth quarter 2025 results. At this time, our participants are in listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. 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, you have Pedro Ant, Chief Executive Officer, Guillermo López-Pérez, Chief Financial Officer, Christopher Strohmeyer, SVP of Corporate Development, and Mayrede 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 D-Local's current assumptions, expectations, and projections about future events. While the company believes that our assumptions, expectations, and projections are reasonable given our 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 for a variety of reasons, including those described in the forward-looking statements and risk factor 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 Fuse products are now live across six countries with solid merchant 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 to the smart APM 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, yet 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 three 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 D-Local. And so despite it still being the early days for our company, this kind of scale sets us up well for competitive advantages 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 five 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. These 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 four 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, improve regulatory compliance, and increasingly offer instant rails being built across the global south. On Stablecoins, we offer 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 Agent Payments to ensure local payment methods across emerging markets are part of that infrastructure from 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 delocal 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 FX 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 at 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, D-Local 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 emerging markets at over $2 trillion and expect it to double by 2030. And we currently hold 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 three 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 DeLocal 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 drives 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.