DLO

DLocal Limited (DLO) Analyst Note Date: 2026-06-13 Subject: Structural Setup & Business Fundamentals Review

1. Structural Readiness

State: Forming Conservative Entry: — (Awaiting confirmed breakout above the coil high) Current Price: $12.79 Extension: — (No extension measured as price has not yet broken out of the coil structure) ATR at Breakout: — (Not applicable; breakout has not fired) ATR Current: 4.0% (High) Pivot Strength: — (Not yet established due to forming state) Cap Bucket: Mid Sector: Financial Services / Technology Industry: Payment Processing Infrastructure

2. Thesis Layer

Thesis Classification: TACTICAL / Setup-Led Secular Thesis: None named at this date. Assessment: This is a tactical, setup-led name. There is no specific macro or secular thesis attached to this specific trade setup as of 2026-06-13. The conviction must be derived entirely from the quality of the technical setup (the forming coil) and the underlying business fundamentals. Do not invent a macro narrative; judge the name on its ability to execute its growth strategy and the structural integrity of its price action.

3. Business Fundamentals

Company Overview: DLocal Limited operates a specialized online payment processing solution with a broad international presence, serving key markets including the United States, Europe, and China. The company's platform enables global enterprise merchants to seamlessly handle both receiving funds (pay-in) and making payments (pay-out) over the internet, facilitating both cross-border and local-to-local transactions.

Business Model & Performance (as of Q1 2026):

• Transaction Volume: Total Payment Volume (TPV) reached $14.1 billion in Q1 2026, representing a 73% year-over-year increase and a 7% quarter-over-quarter increase. This marks the sixth consecutive quarter of growth exceeding 50%.
• Profitability: Gross profit reached a record $119 million, up 40% year-over-year and 2% quarter-over-quarter.
• Operational Scale: The company now processes more volume in a single day than it did in its entire first year of operations a decade ago, sustaining an almost 90% compound annual growth rate over the decade.
• Market Mix: Every vertical in the portfolio grew between Q1 2024 and Q1 2026. The mix has become increasingly diverse across categories, including ride-hailing (serving 4 of the 5 largest players in emerging markets), commerce, streaming, financial institutions, advertising, SaaS, travel, e-learning, on-demand delivery, gaming, and cryptocurrency.
• Strategic Shift: Management notes that local payment methods are no longer alternative options but are the primary way consumers transact online in many of their markets, with their share continuing to grow.

Management Expectations (Recorded at 2026-05-14):

• Cost Structure: Management expects OpEx growth rates to naturally moderate throughout 2026 as the company laps the 2025 cost build-out.
• Operating Leverage: Combined with continued topline momentum, management expects improving operating leverage in the back half of the year.
• Guidance: Guidance remains unchanged from previous expectations.

4. Archetype and Conviction

Archetype: Growth Leader Fit: The company fits the "Growth Leader" archetype due to its sustained double-digit growth in TPV, record gross profits, and expanding market share in emerging markets. The business model is a margin inflector, transitioning from high-cost build-out (2025) to a phase of operating leverage (2026).

Valuation & Financial Spine:

• Forward Consensus EPS: FY1 (2026) is $0.8317; FY2 (2027) is $1.06805.
• Current Price Context: At $12.79, the stock trades at approximately 15.4x FY1 consensus and 12.0x FY2 consensus.
• Conviction Stack:
• Thesis Strength: Low (Tactical only, no macro thesis).
• Evidence Quality: High (Strong earnings data, clear growth trajectory, diverse verticals).
• Structural Quality: Moderate (Forming coil, high volatility).
• Setup Readiness: Partial (Forming state requires breakout confirmation).
• Rerating Potential: Moderate (Dependent on the realization of operating leverage in H2 2026).

ATR Context: The current ATR of 4.0% falls into the "High" bucket (4–6%). This is the historical sweet spot for growth setups, indicating sufficient volatility to generate a move but not so extreme as to suggest a "severe loser" profile (which typically occurs >8%).

5. Invalidations, Strengtheners, and Gaps

Invalidation Triggers:

• Fundamental: A significant deviation from the "unchanged" guidance or a failure to demonstrate the expected moderation in OpEx growth rates in subsequent quarters.
• Macro/Regulatory: Escalation of political, regulatory, or economic risks in Latin America (where a substantial portion of end users are concentrated) that materially disrupts transaction flows.

Strengtheners:

• Technical: A confirmed breakout above the coil high with volume expansion.
• Fundamental: Confirmation of the "improving operating leverage" in the back half of the year as management expects, leading to EPS beats.
• Market Share: Further expansion in the ride-hailing vertical or new major enterprise merchant wins.

Evidence Gaps:

• Margin Details: While gross profit is recorded, specific net margin targets or operating margin percentages for the back half of 2026 are not explicitly quantified in the provided evidence, only the expectation of "improving" leverage.
• Competitive Landscape: While the risk of commoditization is noted, specific data on competitor pricing pressure or market share erosion in 2026 is not detailed.

PRIVATE ANALYST CALL

Judgment: Speculative Confidence: medium Key evidence: TPV up 73% YoY to $14.1B in Q1 2026; Gross profit record $119M; Management expects OpEx moderation and operating leverage in H2 2026. Key risks: High volatility (4.0% ATR) increases risk of false breakouts; Latin American regulatory/economic concentration; Risk of commoditization in emerging markets. Sizing hint: Position size should be reduced relative to a confirmed breakout setup due to the "forming" state and high ATR. Expected path: Price consolidates within the coil structure while management executes the cost-moderation plan; a breakout occurs if H2 leverage expectations are met. Expected horizon: 3 to 6 months for the setup to resolve (breakout or invalidation).