DLocal (NASDAQ:DLO) reported third-quarter 2026 payment volume growth of 77% and record net income, but said currency headwinds and softer performance in some smaller markets have tempered its expectations for the rest of the year.
Total payment volume reached $18.3 billion, while gross profit rose 28% from a year earlier to $132 million. Operating profit increased 37% to $76 million as lower expenses helped the payments company expand its operating profit as a percentage of gross profit to 58%, from 54% a year earlier.
Chief Executive Officer Pedro Arnt said existing merchant relationships continued to drive growth as clients expanded into additional countries, business lines and payment methods. Net revenue retention was 140%, and total payment volume retention was 173%.
Currency Headwinds Shape Outlook
DLocal reiterated its full-year guidance ranges, with payment volume growth expected toward the upper end of its 60% to 70% range. Arnt said volume growth was moderating against tougher comparisons following merchant ramp-ups in prior periods.
The company now expects gross profit growth around the midpoint of its 25% to 30% range. Arnt cited previously unanticipated fourth-quarter foreign exchange headwinds in Brazil, Mexico and Argentina, which the company estimates will create a six-percentage-point swing in year-over-year gross profit growth for the quarter. Performance has also been somewhat softer in smaller, higher-take-rate markets in Africa and Asia, he said.
Management’s operating profit growth outlook has moderated toward the lower end of its 27.5% to 32.5% range. Arnt cautioned that fourth-quarter results are sensitive to the peak shopping season and that its expectations could change in either direction.
Profitability and Cash Flow Improve
Net income climbed 31% year over year to a record $68 million, while diluted earnings per share rose about 35% to a record $0.23. Chief Financial Officer Guillermo López Pérez said share repurchases helped earnings per share grow faster than net income.
Operating expenses fell 11% sequentially to $56 million, reflecting lower third-party spending and headcount as well as the timing of marketing expenses. Headcount declined 3% in the third quarter after peaking in the second, Arnt said.
López Pérez cautioned against treating the quarter’s operating profit ratio as a future margin target. He said marketing spending was concentrated in the first half and one-off expenses were lower than usual in the third quarter. Over a full year, management expects gross profit to grow faster than operating expenses, although quarterly results may be uneven.
Adjusted free cash flow was $99 million in the quarter and $182 million for the first nine months of the year. López Pérez said the quarterly result benefited partly from the reversal of temporary working-capital effects and that some of the benefit is expected to normalize in future quarters.
DLocal repurchased approximately $34 million of shares during the quarter, bringing year-to-date repurchases to about $120 million. The company also signed a $150 million credit facility in August. López Pérez said the facility provides liquidity at the holding-company level for general corporate purposes, including buybacks, while cash held at subsidiaries supports local operations and regulatory requirements.
Mexico and Asia in Focus
Growth in payment volume came from markets including Brazil, Mexico, Argentina, Colombia and South Africa, López Pérez said. Ride-hailing and on-demand delivery were major contributors, while social media advertising was particularly strong in Brazil because of election-related activity that the company expects to normalize after the elections.
In Mexico, gross profit was affected by higher processing costs, including catch-up costs from prior periods. Arnt said DLocal needs to use its record payment volume in the country to lower its cost structure. He added that a concentration of large merchants at lower pricing tiers had also affected the business.
Arnt said Mexico could improve next year or potentially as the company exits 2026, depending on the shopping season. He also identified other Latin American markets outside Brazil, Mexico and Argentina as a potential source of sequential acceleration.
Asia is a longer-term expansion priority. Arnt said the region’s fragmented payment methods and regulatory environments create opportunities for DLocal, but the company must continue building its infrastructure, local partnerships and team. He said Asia could contribute a mid- to high-single-digit percentage of revenue in 2027, depending on execution, while emphasizing that the estimate referred to revenue rather than gross profit.
Arnt also pointed to growth opportunities in new products. DLocal has launched physical payments in Mexico, and its buy-now-pay-later platform has more than 15 merchants. He said the company’s digital asset and stablecoin business is growing, while activity explicitly using agentic commerce protocols remains low.
About DLocal (NASDAQ:DLO)
DLocal is a payments technology company that helps global businesses accept and send payments in emerging markets. Its platform connects merchants with local payment systems, allowing them to manage transactions across multiple countries through a single integration. The company’s services include payment collection, or pay-ins, and disbursements, or pay-outs. It supports local payment options such as cards, bank transfers, digital wallets and cash-based methods, helping businesses serve customers who may not use international payment networks.
