UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2022

Commission File Number: 001-40451

 

 

DLocal Limited

(Exact name of registrant as specified in its charter)

 

 

Dr. Luis Bonavita 1294

Montevideo

Uruguay 11300

+1 (424) 392-7437

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ☐ No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ☐ No ☒

 

 

 

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TABLE OF CONTENTS

EXHIBIT

 

99.1		Press release dated November 14, 2022 - DLocal Limited Reports 2022 Third Quarter Results
99.2		DLocal Limited Unaudited Consolidated Condensed Interim Financial Statements as of September 30, 2022 and for the nine-month and three-month periods ended September 30, 2022 and 2021
99.3		Quaterly Report 2022 - dLocal Reports 2022 Third Quarter Financial results
99.4		dLocal Q3 2022 Earnings Presentation

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	DLocal Limited
	By:	/s/ Diego Cabrera Canay
	Name:	Diego Cabrera Canay
	Title:	Chief Financial Officer

 

Date: November 15, 2022

 

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Exhibit 99.1

 

 

 

dLocal Limited Reports 2022 Third Quarter Financial Results

 

Third Quarter 2022

US$2.7 billion Total Payment Volume, up 51% year-over-year

Revenues of US$112 million, up 63% year-over-year

152% Net Revenue Retention Rate

37% Adjusted EBITDA Margin

 

 

dLocal reports in US dollars and in accordance with IFRS as issued by the IASB

 

Montevideo, Uruguay November 14, 2022 — DLocal Limited (“dLocal”, “we”, “us”, and “our”) (NASDAQ:DLO), a technology- first payments platform, announced its financial results today for the third quarter ended September 30, 2022.

 

“We delivered another quarter of record results, reaching U$2.7 billion in TPV and US$112 million in revenues. We saw robust growth in TPV increasing by 51% and revenues further accelerating 63% year-over-year, despite the high comparison base from last year, and both metrics increasing by 12% and 11%, respectively, quarter-over-quarter. The growth has been supported by our disciplined execution and lean culture, in addition to our business strength of continuous diversification across verticals, regions, and products. Throughout recent quarters, we have been committed to growing outside Latin America, and we are very pleased to announce the impressive results we reached in Q3 2022. Revenues from Africa and Asia increased by four times year-over-year and 80% quarter-over-quarter, reaching US$25 million. These strong results over just a three-month period surpassed the US$21 million recorded in the entire twelve months of 2021. In Q3 2022, Africa and Asia revenues already contributed to 22% of our total revenues, which is a proven record that our strategic decision making is paying off.

 

We continue to deliver on our strategy of maximizing gross profit and EBITDA dollars. During the third quarter, gross profit increased to US$54 million, up by 56% year-over-year, whereas Adjusted EBITDA was up by 58% year-over-year to US$42 million. Both metrics increased by 9% quarter-over-quarter. This was reflected in a solid adjusted EBITDA margin of 37%, in line with the 38% recorded in the past four quarters, while we continue to invest in our business with discipline by increasing our headcount 34% year-over-year to 712 employees.

 

We continue to drive our expansion across emerging markets, launching operations in two new countries, Nicaragua and Saudi Arabia, bringing the total number of countries in which we operate to 39, as we balance the expansion of our operations into new countries with strengthening our presence in existing markets.

 

Our track record of disciplined, high profitable growth and our strong balance sheet, give us confidence that we are uniquely positioned to fulfill our long-term growth strategy while navigating a challenging global macro environment. We will seek to continue building the best financial infrastructure across multiple emerging markets for our merchants through the One dLocal model: one contract, one single platform, and one API,” said Sebastian Kanovich.

 

 

Third Quarter 2022 Financial Highlights

 

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The following table summarizes our key performance metrics:

 

	Three months ended				Nine months ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	(in millions of US$ except for %)
Key Performance Metrics
TPV	2,734		1,812		7,271		4,193
TPV growth YoY	51%		217%		73%		221%
Revenue	111.9		68.6		300.5		167.9
Revenue growth YoY	63%		123%		79%		142%
Adj. EBITDA	41.6		26.3		112.7		70.1
Adj. EBITDA Margin	37%		38%		37%		42%

 

Third quarter 2022 Business Highlights

 

Special Note Regarding Adjusted EBITDA and Adjusted EBITDA Margin

dLocal has only one operating segment. dLocal measures its operating segment’s performance by Revenues, Adjusted EBITDA and Adjusted EBITDA Margin, and uses these metrics to make decisions about allocating resources.



Adjusted EBITDA as used by dLocal is defined as the profit from operations before financing and taxation for the year or period, as applicable, before depreciation of property, plant and equipment, amortization of right-of-use assets and intangible assets, and further excluding the changes in fair value of financial assets and derivative instruments carried at fair value through profit or loss, impairment gains/(losses) on financial assets, transaction costs, share-based payment non-cash charges, secondary offering expenses, and inflation adjustment. dLocal defines Adjusted EBITDA Margin as the Adjusted EBITDA divided by consolidated revenues.



Although Adjusted EBITDA and Adjusted EBITDA Margin may be commonly viewed as non-IFRS measures in other contexts, pursuant to IFRS 8, (“Operating Segments”), Adjusted EBITDA and Adjusted EBITDA Margin are treated by dLocal as IFRS measures based on the manner in which dLocal utilizes these measures. Nevertheless, dLocal’s Adjusted EBITDA and Adjusted EBITDA Margin metrics should not be viewed in isolation or as a substitute for net income for the periods presented under IFRS. dLocal also believes that its Adjusted EBITDA and Adjusted EBITDA Margin metrics are useful metrics used by analysts and investors, although these measures are not explicitly defined under IFRS. Additionally, the way dLocal calculates operating segment’s performance measures may be different from the calculations used by other entities, including competitors, and therefore, dLocal’s performance measures may not be comparable to those of other

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entities.



The table below presents a reconciliation of dLocal’s Adjusted EBITDA and Adjusted EBITDA Margin to net income:
 

 

In thousands of US$ except for %	Three-months ended September 30				Nine-months ended September 30
	2022		2021		2022		2021
Profit for the period	32,338		19,669		89,333		54,304
Income tax expense	2,287		2,558		7,651		5,533
Depreciation and amortization	2,110		1,381		5,690		3,240
Finance income and costs, net	2,479		(865)		3,519		(762)
Share-based payment non-cash charges	1,599		2,673		4,874		5,354
Other operating loss/(gain)	18		—		706		(2,896)
Secondary offering expenses1	—		695		89		4,442
Transaction costs	—		211		—		665
Other charges, net	791		(3)		799		205
Adjusted EBITDA	41,622		26,319		112,661		70,085
Revenues	111,864		68,646		300,497		167,863
Adjusted EBITDA	41,622		26,319		112,661		70,085
Adjusted EBITDA Margin	37.2%		38.3%		37.5%		41.8%

 

1 Secondary expenses for the nine-months ended September 30, 2022 corresponds to expenses assumed by dLocal in relation to the secondary offering of its shares occurred in 2021.

 

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Earnings per share:

We calculate basic earnings per share by dividing the profit attributable to equity holders by the weighted average number of common shares issued and outstanding during the three-months and nine-months periods ended September 30, 2022 and 2021.



Our diluted earnings per share is calculated by dividing the profit attributable to equity holders of dLocal by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all dilutive potential common shares into common shares.

The following table presents the information used as basis for the calculation of our earnings per share:

 

	For the three-month period ended September 30				For the nine-month period ended September 30
	2022		2021		2022		2021
Profit attributable to common shareholders (U.S. Dollars)	32,461,922		19,663,000		89,325,969		54,291,000
Weighted average number of common shares	295,918,751		293,558,997		295,455,429		284,456,779
Adjustments for calculation of diluted earnings per share	17,246,606		19,646,000		17,783,776		19,609,500
Weighted average number of common shares for calculating diluted earnings per share	313,165,357		313,204,997		313,239,205		304,066,279
Basic earnings per share	0.11		0.07		0.30		0.19
Diluted earnings per share	0.10		0.06		0.29		0.18

 

This press release does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, “Interim Financial Reporting” nor a financial statement as defined by International Accounting Standards 1 “Presentation of Financial Statements”. The financial information in this press release has not been audited.

 

Conference Call and Webcast

 

dLocal’s management team will host a conference call and audio webcast on November 15, 2022 at 8:30 a.m. Eastern Time. Please click here to pre-register for the conference call and obtain your dial in number and passcode.



The live conference call can be accessed via audio webcast at the investor relations section of dLocal’s website, at https://investor.dlocal.com/. An archive of the webcast will be available for a year following the conclusion of the conference call. The investor presentation will also be filed on EDGAR at www.sec.gov.



About dLocal

 

dLocal powers local payments in emerging markets, connecting global enterprise merchants with billions of emerging market consumers in 39 countries across APAC, the Middle East, Latin America, and Africa. Through the “One dLocal” platform (one direct API, one platform, and one contract), global companies can accept payments, send pay-outs and settle funds globally without the need to manage separate pay-in and pay-out processors, set up numerous local entities, and integrate multiple acquirers and payment methods in each market.

 

 

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Definition of Selected Operational Metrics

 

“API” means application programming interface, which is a general term for programming techniques that are available for software developers when they integrate with a particular service or application. In the payments industry, APIs are usually provided by any party participating in the money flow (such as payment gateways, processors, and service providers) to facilitate the money transfer process.

 

“Enterprise Global Merchants” means merchants with at least US$6 million of annual TPV processed through our platform.

 

“Local payment methods” refers to any payment method that is processed in the country where the end user of the merchant sending or receiving payments is located, which include credit and debit cards, cash payments, bank transfers, mobile money, and digital wallets.

 

“NRR” means net revenue retention rate, which is the U.S. dollar-based measure of retention and growth of our merchants. We calculate the NRR of a period by dividing the current period revenue by the prior period revenue. The prior period revenue is the revenue billed by us to all of our merchant customers in the corresponding period for the prior fiscal year. The current period revenue is the revenue billed by us in the corresponding period for the current fiscal year to the same merchant customers included in the calculation of the prior period revenue. Current period revenue includes any upsells and cross sells of products, geographies, and payment methods to such merchant customers, and is net of any contractions or attrition, but excludes revenue from new customers on-boarded during the last 12 months.

 

“Pay-in” means a payment transaction whereby dLocal’s merchant customers receive payment from their customers.

 

“Pay-out” means a payment transaction whereby dLocal disburses money in local currency to the business partners or customers of dLocal’s merchant customers.

 

“Revenue from New Merchants” means the revenue billed by us to merchant customers that we did not bill revenues in the same quarter (or period) of the prior year.

 

“Revenue from Existing Merchants” means the revenue billed by us in the last twelve months to the merchant customers that we billed revenue in the same quarter (or period) of the prior year.

 

Forward Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements convey dLocal’s current expectations or forecasts of future events. Forward-looking statements regarding dLocal involve known and unknown risks, uncertainties and other factors that may cause dLocal’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the “Risk Factors,” “Forward-Looking Statements” and “Cautionary Statement Regarding Forward-Looking Statements” sections of dLocal’s filings with the U.S. Securities and Exchange Commission. Unless required by law, dLocal undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date hereof.

 

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DLocal Limited

 

Certain interim financial information

Consolidated Condensed Interim Statements of Comprehensive Income for the three-month and nine-month periods ended September 30, 2022 and 2021

(In thousands of U.S. dollars, except per share amounts, unaudited)

 

	Three months ended								Nine months ended
	September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Continuing operations
Revenues		111,864				68,646				300,497				167,863
Cost of services		(57,992	)			(34,202	)			(153,432	)			(76,361	)
Gross profit		53,872				34,444				147,065				91,502
Technology and development expenses		(1,692	)			(1,116	)			(4,741	)			(2,232	)
Sales and marketing expenses		(3,472	)			(1,255	)			(9,444	)			(3,424	)
General and administrative expenses		(11,483	)			(10,887	)			(30,872	)			(30,080	)
Impairment gain/(loss) on financial assets		24				159				106				(8	)
Other operating (loss)/gain		(18	)			224				(706	)			3,514
Operating profit		37,231				21,569				101,408				59,272
Finance income		6,810				1,089				12,346				1,273
Finance costs		(9,289	)			(275	)			(15,865	)			(511	)
Inflation adjustment		(127	)			(156	)			(905	)			(197	)
Other results		(2,606	)			658				(4,424	)			565
Profit before income tax		34,625				22,227				96,984				59,837
Income tax expense		(2,287	)			(2,558	)			(7,651	)			(5,533	)
Profit for the period		32,338				19,669				89,333				54,304
Profit attributable to:
Owners of the Group		32,462				19,663				89,326				54,291
Non-controlling interest		(124	)			6				7				13
Profit for the period		32,338				19,669				89,333				54,304
Earnings per share
Basic Earnings per share		0.11				0.07				0.30				0.19
Diluted Earnings per share		0.10				0.06				0.29				0.18
Other comprehensive Income
Items that may be reclassified to profit or loss:
Exchange difference on translation on foreign operations		(405	)			(391	)			(488	)			477
Other comprehensive income for the period, net of tax		(405	)			(391	)			(488	)			477
Total comprehensive income for the period		31,933				19,278				88,845				54,781
Total comprehensive income for the period is attributable to:
Owners of the Group		32,057				19,252				88,838				54,759
Non-controlling interest		(124	)			26				7				22
Total comprehensive income for the period		31,933				19,278				88,845				54,781

 

 

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DLocal Limited

 

Certain interim financial information

Consolidated Condensed Interim Statements of Financial Position as of September 30, 2022 and December 31, 2021

(In thousands of U.S. dollars, except per share amounts, unaudited)

		September 30, 2022		December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents		542,298		336,197
Financial assets at fair value through profit or loss		1,065		1,004
Trade and other receivables		228,895		190,966
Derivative financial instruments		657		—
Other assets		3,937		1,339
Total Current Assets		776,852		529,506
Non-Current Assets
Deferred tax assets		1,101		133
Property, plant and equipment		2,814		2,485
Right-of-use assets		3,938		3,915
Intangible assets		49,875		46,969
Total Non-Current Assets		57,728		53,502
TOTAL ASSETS		834,580		583,008
LIABILITIES
Current Liabilities
Trade and other payables		423,606		277,160
Borrowings		14,782		5,014
Lease liabilities		625		502
Tax liabilities		11,885		13,126
Derivative financial instruments		446		221
Provisions		1,540		1,710
Contingent consideration liability		—		665
Total Current Liabilities		452,884		298,398
Non-Current Liabilities
Deferred tax liabilities		503		883
Lease liabilities		3,449		3,426
Total Non-Current Liabilities		3,952		4,309
TOTAL LIABILITIES		456,836		302,707
EQUITY
Share Capital		592		590
Share Premium		165,318		157,151
Capital Reserve		13,170		12,741
Other Reserves		(1,785)		(30)
Retained earnings		200,460		109,867
Total Equity Attributable to owners of the Group		377,755		280,319
Non-controlling interest		(11)		(18)
TOTAL EQUITY		377,744		280,301

 

 

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dLocal was incorporated on February 10, 2021, as a Cayman Islands exempted company with limited liability, duly registered with the Cayman Islands Registrar of Companies. The contribution of dLocal Group Limited (a limited liability company incorporated in Malta, the former holding entity or “dLocal Malta”) shares to dLocal has been finalized as of April 14, 2021. Until the contribution of dLocal Malta shares to it, dLocal had not commenced operations, consequently the historical information previous to that date presented in here corresponds to dLocal Malta, our predecessor. This reorganization was done, among other things, to facilitate the initial public offering of the Group. dLocal had no prior assets, holdings or operations.

 

 

 

 

 

 

Investor Relations Contact:

investor@dlocal.com

 

Media Contact:

marketing@dlocal.com

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Exhibit 99.2

 

 

 

DLocal Limited

Unaudited Consolidated Condensed Interim Financial Statements as of September 30, 2022 and for the nine-month and three-month periods ended September 30, 2022 and 2021

 

 

 

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DLocal Limited

Consolidated Condensed Interim Statements of Comprehensive Income

For the nine-month and three-month periods ended September 30, 2022 and 2021

(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)

 

				Nine months ended								Three months ended
		Notes		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Continuing operations
Revenues		6			300,497				167,863				111,864				68,646
Cost of services		6			(153,432	)			(76,361	)			(57,992	)			(34,202	)
Gross profit					147,065				91,502				53,872				34,444
Technology and development expenses		7			(4,741	)			(2,232	)			(1,692	)			(1,116	)
Sales and marketing expenses		8			(9,444	)			(3,424	)			(3,472	)			(1,255	)
General and administrative expenses		8			(30,872	)			(30,080	)			(11,483	)			(10,887	)
Impairment gain/(loss) on financial assets		14			106				(8	)			24				159
Other operating (loss)/gain					(706	)			3,514				(18	)			224
Operating profit					101,408				59,272				37,231				21,569
Finance income					12,346				1,273				6,810				1,089
Finance costs					(15,865	)			(511	)			(9,289	)			(275	)
Inflation adjustment					(905	)			(197	)			(127	)			(156	)
Other results					(4,424	)			565				(2,606	)			658
Profit before income tax					96,984				59,837				34,625				22,227
Income tax expense		11			(7,651	)			(5,533	)			(2,287	)			(2,558	)
Profit for the period					89,333				54,304				32,338				19,669
Profit attributable to:
Owners of the Group					89,326				54,291				32,462				19,663
Non-controlling interest					7				13				(124	)			6
Profit for the period					89,333				54,304				32,338				19,669
Earnings per share
Basic Earnings per share		12			0.30				0.19				0.11				0.07
Diluted Earnings per share		12			0.29				0.18				0.10				0.06
Other comprehensive Income
Items that may be reclassified to profit or loss:
Exchange difference on translation on foreign operations					(488	)			477				(405	)			(391	)
Other comprehensive income for the period, net of tax					(488	)			477				(405	)			(391	)
Total comprehensive income for the period					88,845				54,781				31,933				19,278
Total comprehensive income for the period is attributable to:
Owners of the Group					88,838				54,759				32,057				19,252
Non-controlling interest					7				22				(124	)			26
Total comprehensive income for the period					88,845				54,781				31,933				19,278

 

The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements.

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DLocal Limited

Consolidated Condensed Interim Statements of Financial Position

As of September 30, 2022 and December 31, 2021

(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)

 

		Notes		September 30, 2022		December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents		13		542,298		336,197
Financial assets at fair value through profit or loss				1,065		1,004
Trade and other receivables		14		228,895		190,966
Derivative financial instruments		20		657		—
Other assets		15		3,937		1,339
Total Current Assets				776,852		529,506
Non-Current Assets
Deferred tax assets				1,101		133
Property, plant and equipment				2,814		2,485
Right-of-use assets				3,938		3,915
Intangible assets		16		49,875		46,969
Total Non-Current Assets				57,728		53,502
TOTAL ASSETS				834,580		583,008
LIABILITIES
Current Liabilities
Trade and other payables		17		423,606		277,160
Borrowings		18		14,782		5,014
Lease liabilities				625		502
Tax liabilities		19		11,885		13,126
Derivative financial instruments		20		446		221
Provisions		21		1,540		1,710
Contingent consideration liability				—		665
Total Current Liabilities				452,884		298,398
Non-Current Liabilities
Deferred tax liabilities				503		883
Lease liabilities				3,449		3,426
Total Non-Current Liabilities				3,952		4,309
TOTAL LIABILITIES				456,836		302,707
EQUITY
Share Capital		12		592		590
Share Premium		12		165,318		157,151
Capital Reserve		12		13,170		12,741
Other Reserves		12		(1,785)		(30)
Retained earnings		12		200,460		109,867
Total Equity Attributable to owners of the Group				377,755		280,319
Non-controlling interest				(11)		(18)
TOTAL EQUITY				377,744		280,301

 

The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statement

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DLocal Limited

Consolidated Condensed Interim Statements of Changes in Equity

For the nine-month periods ended September 30, 2022 and 2021

(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)

 

		Notes		Share Capital		Share Premium		Capital Reserve		Other Reserves		Retained Earnings		Total		Non- controlling interest		Total equity
Balance as of January 1st, 2022				590		157,151		12,741		(30)		109,867		280,319		(18)		280,301
Comprehensive Income for the period
Profit of the period				—		—		—		—		89,326		89,326		7		89,333
Exchange difference on translation on foreign operations				—		—		—		(1,755)		1,267		(488)		—		(488)
Total Comprehensive Income for the period				—		—		—		(1,755)		90,593		88,838		7		88,845
Transactions with Group owners in their capacity as owners
Share-options exercise		12		2		8,167		(4,445)		—		—		3,724		—		3,724
Forfeitures		12		—		—		(720)		—		—		(720)		—		(720)
Share-based payments		9		—		—		5,594		—		—		5,594		—		5,594
Transactions with Group owners in their capacity as owners				2		8,167		429		—		—		8,598		—		8,598
Balance as of September 30, 2022				592		165,318		13,170		(1,785)		200,460		377,755		(11)		377,744
Balance as of January 1st, 2021				602		—		12,582		119		31,749		45,052		(4)		45,048
Comprehensive Income for the period
Profit of the period				—		—		—		—		54,291		54,291		13		54,304
Exchange difference on translation on foreign operations				—		—		—		304		164		468		9		477
Total Comprehensive Income for the period				—		—		—		304		54,455		54,759		22		54,781
Transactions with Group owners in their capacity as owners
Initial public offering, net of underwriting discount and incremental and direct costs				9		86,441		—		—		—		86,450		—		86,450
Issue of ordinary shares		12		45		63,132				—		—		63,177		—		63,177
Par value change from 1.1211 U.S. Dollars to 1 U.S. Dollars				(70)		70
Share-options exercise		12		—		6,979		(6,898)		—		—		81		—		81
Share-based payments		9		—		—		5,360		—		—		5,360		—		5,360
Forfeitures		12		—		—		(6)		—		—		(6)		—		(6)
Warrant exercise		12		4		529		(533)		—		—		—		—		—
Transactions with Group owners in their capacity as owners				(12)		157,151		(2,077)		—		—		155,062		—		155,062
Balance as of September 30, 2021				590		157,151		10,505		423		86,204		254,873		18		254,891

 

The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements.

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DLocal Limited

Consolidated Condensed Interim Statements of Cash Flows

For the nine-month periods ended September 30, 2022 and 2021

(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)

 

				Nine months ended
		Notes		September 30, 2022		September 30, 2021
Cash flows from operating activities
Profit before income tax				96,984		59,837
Adjustments:
Interest income from financial instruments				(12,371)		(1,289)
Interest charges for lease liabilities				133		97
Other finance expense				15,732		414
Amortization of Intangible assets		10		4,809		2,594
Depreciation of Property, plant and equipment		10		530		309
Amortization of Right-of-use asset		10		351		337
Revenue reduction related to prepaid assets		15		457		150
Share-based payment expense, net of forfeitures		9		4,874		5,354
Net exchange differences				(10,434)		528
Fair value loss on financial assets at fair value through profit or loss				25		16
Other operating loss/(gain)		20		—		(2,896)
Net Impairment (gain)/loss on financial assets		14		(106)		8
				100,984		65,459
Changes in working capital
Increase in Trade and other receivables		14		(37,873)		(91,964)
(Increase)/decrease in Other assets		15		(3,328)		146
Increase in Trade and other payables		17		146,446		101,611
(Decrease)/increase in Tax Liabilities		19		(3,284)		847
(Decrease)/increase in Provisions		21		(170)		1,016
Cash from operating activities				202,775		77,115
Income tax paid		12		(6,956)		(7,975)
Net cash from operating activities				195,819		69,140
Cash flows from investing activities
Acquisitions of Property, plant and equipment				(859)		(1,639)
Additions of Intangible assets		16		(7,715)		(43,575)
Net collections of financial assets at FVPL				(518)		7,237
Interest collected from financial instruments				12,371		1,289
Payments of contingent consideration				(665)		—
Net cash from/(used in) investing activities				2,614		(36,688)
Cash flows from financing activities
Proceeds from issuance of shares		12		—		63,177
Proceeds from initial public offering				—		87,088
Initial public offering expenses paid				—		(638)
Proceeds from transaction between shareholders				—		149,411
Increase in Restricted cash				—		(149,411)
Share-options exercise				3,724		81
Borrowings proceeds				14,782		—
Borrowings repayments				(5,364)		—
Interest payments on lease liability				(133)		(97)
Principal payments on lease liability				(125)		(326)
Other finance expense paid				(4,360)		(414)
Net cash provided by financing activities				8,524		148,871
Net increase in cash flow				206,957		181,323
Cash and cash equivalents at the beginning of the period				336,197		111,733
Effects of exchange rate changes on cash and cash equivalents				(856)		(1)
Cash and cash equivalents at the end of the period				542,298		293,055

 

---

 

The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements.

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DLocal Limited

Notes to the Consolidated Condensed Interim Financial Statements

At September 30, 2022

(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)

 

 

1. General information and Significant Events during the period

 

1.1. General information

 

DLocal Limited (“dLocal” or the “Company”) is a holding company, referred to together with its subsidiaries as the “Group”. dLocal is a limited liability company. The Group was established on October 5, 2016, under the holding company dLocal Group Limited, domiciled and incorporated in Malta, and on April 14, 2021 it was reorganized under dLocal, domiciled and incorporated in the Cayman Islands. The Company is the ultimate controlling party of the Group.

 

The Group processes online payment transactions, enabling enterprise merchants located in developed economies (mainly United States, Europe and China) to get paid (“payins”) from customers in emerging markets and to make payments (“payouts”) to customers in emerging markets. As of the date of issuance of this Consolidated Condensed Interim Financial Statements, the Group continued to focus on its expansion efforts bringing the total number of countries in the geographic network to 39.

 

In order to conduct its business, the Group has direct connections with banks, acquirers and payments processors to process payments locally in emerging markets. It also operates with financial institutions to expatriate/ repatriate the funds to/from the developed economies where the merchant customers elect to settle their funds in the currency of their preference (mainly U.S. Dollar and Euro). These consolidated condensed interim financial statements include dLocal’s subsidiaries and details of the structure are included under Note 4: Consolidation of subsidiaries.

 

The Group is licensed and regulated in the EU as an Electronic Money Issuer, or EMI, and Payment Institution, or PI, and registered as a Money Service Business with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or FinCEN, and we operate and are licensed, as applicable, in 39 in emerging markets, primarily in the Americas, Asia and Africa.

 

In addition, the Group is subject to laws aimed at preventing money laundering, corruption and the financing of terrorism. This regulatory landscape is constantly changing, including as a consequence of the implementation of the Fourth Anti-Money Laundering Directive (Directive 2015/849/EU, “MLD4”) and the proposed amendments to the MLD4, often referred to as the fourth Anti-Money Laundering Directive.

 

1.2. Significant events during the period

 

On May 2, 2022, the Group filed its annual report on Form 20-F as of December 31, 2021, and 2020 and for the years ended December 31, 2021, 2020, and 2019.

 

---

 

On March 3, 2022, DLocal Group Limited (the “Borrower”) entered into a Credit Agreement (the “Agreement”) with Bank J. Safra Sarasin (Gibraltar) Ltd, acting through its London Branch (the “Bank”), pursuant to which the Bank grants a facility to the Borrower of a maximum amount of a total of U$S 4,000 (the “Credit Facility”). The Borrower may utilize the Credit Facility for options and futures transactions as well as structured products subject to margin requirements.

 

 

On August 10, 2022, Alberto Almeida was appointed as the new Chief Technology Officer of the Company, effective immediately, following the decision of Hernan Di Chello to step down from that position to pursue an outside opportunity.

 

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2. Presentation and preparation of the Consolidated Condensed Interim Financial Statements and significant accounting policies

 

2.1. Basis of preparation of consolidated condensed interim financial information

 

These Consolidated Condensed Interim Financial Statements for the nine months ended September 30, 2022 have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” as issued by the International Accounting Standard Board.

 

These Consolidated Condensed Interim Financial Statements do not include all the notes of the type normally included in an annual consolidated financial statement. Accordingly, this report should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2021 (the “Annual Financial Statements”).

 

The accounting policies and critical accounting estimates and judgments adopted, except for those explicitly indicated on these Consolidated Condensed Interim Financial Statements, are consistent with those of the previous financial year and corresponding interim reporting period.

 

All amounts are presented in thousands of U.S. Dollars except share data or as otherwise indicated.

 

These Consolidated Condensed Interim Financial Statements for the nine months ended September 30, 2022 were authorized for issuance by the dLocal’s Board of Directors on November 14, 2022.

 

2.2. Share-based payments

 

During the nine months ended September 30, 2022 , the Group granted new share options and restricted share units under the Amended and Restated 2020 Global Share Incentive Plan to executives and employees in return for their services, which represented changes in the composition of share options outstanding at the end of the period.

 

2.2.1. Employee Share Purchase Plan (“ESPP”)

 

Set out below are summaries of restricted share units and share options granted under the plan:

 

		September 30, 2022				December 31, 2021 *
		Average				Average
		exercise price				exercise price
		per share				per share
		option		Number of		option		Number of
		(U.S. Dollars)		options and RSUs		(U.S. Dollars)		options and RSUs
At the beginning of the period		1.16		4,032,345		1.22		17,361,000
Granted during the period		24.26		1,104,677		3.69		2,371,345
Exercised during the period		3.91		(956,650)		2.03		(15,685,000)
Forfeited during the period		11.01		(681,741)		4.15		(15,000)
At the end of the period		8.45		3,498,631		1.16		4,032,345
Vested and exercisable at the end of the period		3.66		317,350		3.54		486,750

 

* Retroactively adjusted to reflect the effect of the stock split described in Note 1 to the Annual Financial Statements for the year ended December 31, 2021.

 

No options expired during the periods covered by the above table.

 

Share options and restricted share units outstanding at the end of the period have the following expiry dates and exercise prices:

 

---

Grant date		Vesting period		Last vesting date		Exercise price (U.S. Dollars per A Share)		Share options and RSUs September 30, 2022		Share options and RSUs December 31, 2021 *
August 1st, 2018		3 years		August 1st, 2021		0.74		—		90,500
October 1st, 2019		3 years		October 1st, 2022		2.18		77,000		90,000
August 24th, 2020		5 years		August 24th, 2025		3.30		700,000		835,000
November 15th, 2020		4 years		November 15th, 2024		4.15		87,750		135,000
November 23rd, 2020		5 years		November 23rd, 2025		3.88		—		525,500
January 1st, 2021		5 years		January 1st, 2026		3.88		133,000		210,000
March 1st, 2021		1 year		March 1st, 2022		0.002		5,500	**	5,500	**
March 2nd, 2021		5 years		March 2nd, 2026		7.44		8,000		10,000
March 11th, 2021		5 years		March 11th, 2026		0.002		54,600	**	1,031,000	**
March 11th, 2021		3 years		July 31st, 2024		0.002		772,000	**	—
March 11th, 2021		5 years		March 11th, 2026		7.44		28,500		36,000
March 12nd, 2021		5 years		March 12nd, 2026		7.44		—		7,000
March 15th, 2021		5 years		March 15th, 2026		7.44		—		7,500
March 29th, 2021		5 years		March 29th, 2026		7.44		—		10,000
May 11th, 2021		5 years		May 11th, 2026		7.44		603,500		927,500
May 11th, 2021		3 years		May 11th, 2024		0.002		22,500	**	22,500	**
May 18th, 2021		5 years		May 18th, 2026		16.17		10,000		10,000
December 9th, 2021		5 years		December 9th, 2026		0.002		73,366	**	79,345	**
February 21st, 2022		5 years		February 21st, 2027		0.002		6,930	**	—
March 16th, 2022		5 years		March 16th, 2027		30.47		20,000		—
March 28th, 2022		5 years		March 28th, 2027		30.27		55,256		—
April 1st, 2022		5 years		April 1st, 2027		0.002		4,886	**	—
May 1st, 2022		5 years		May 1st, 2027		0.002		57,665	**	—
May 1st, 2022		5 years		May 1st, 2027		26.01		240,000		—
May 18th, 2022		5 years		May 18th, 2027		19.72		160,000		—
May 26th, 2022		5 years		May 26th, 2027		21.02		20,000		—
July 1st, 2022		6 years		July 1st, 2028		26.70		88,500		—
July 1st, 2022		3 years		July 1st, 2025		0.002		13,428	**	—
August 15th, 2022		5 years		August 15th, 2027		0.002		20,000	**	—
August 15th, 2022		5 years		August 15th, 2027		29.23		80,000		—
August 15th, 2022		5 years		August 15th, 2027		29.23		101,250		—
August 15th, 2022		5 years		August 15th, 2027		29.23		25,000		—
September 6th, 2022		5 years		September 6th, 2027		26.51		30,000		—
Total								3,498,631		4,032,345
Weighted average remaining contractual life of restricted share units and share options outstanding at end of the year								3.12 years		4.24 years

 

* Retroactively adjusted to reflect the effect of the stock split described in Note 1 to the Annual Financial Statements for the year ended December 31, 2021.

** It corresponds to Restricted Share Units (RSUs) granted.

 

2.3. New accounting pronouncements

 

The Group has not early adopted the following standards, interpretations or amendments that have been issued but are not yet effective:

 

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The Group did not change its accounting policies or make retrospective adjustments as a result of new accounting standards made applicable on January 1, 2022.

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3. Accounting estimates and judgments

 

Accounting estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

The critical accounting estimates and judgments adopted on these Consolidated Condensed Interim Financial Statements are consistent with those of the previous financial year and corresponding interim reporting period.

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4. Consolidation of subsidiaries

 

DLocal Limited, located in Cayman Islands, is the parent company of the Group and acts as a holding company for subsidiaries whose main activity is cross-border and local payments, enabling international merchants to access end customers in emerging markets. Its revenue comes from dividends receivable from subsidiaries and share of profit from subsidiary partnership.

 

The consolidated financial statements of the Group include the following subsidiaries:

 

						% of equity interest held by Dlocal
Entity name		Country of incorporation		Principal activities		September 30, 2022		December 31, 2021
Dlocal Group Limited		Malta		Holding Company		100%		100%
Dlocal Limited		Malta		Payments provider		99.999%		99.999%
Dlocal Markets Limited		Malta		Holding Company		100%		100%
Dlocal Hold Ops Limited		Cayman Islands		Holding Company		100%	(3)	-
Dlocal LLP		United Kingdom		Payments provider		99.999%		99.999%
Dlocal Corp LLP		United Kingdom		Payments provider		99.99%		99.99%
Dlocal OpCo UK LTD		United Kingdom		Payments provider		100%	(3)	-
Dlocal Inc.		United States of America		Holding Company		100%		100%
Dlocal Technologies S.A.		Uruguay		Service provider		100%		100%
Dlocal Uruguay S.A.		Uruguay		Collection agent		100%		100%
Dlocal PTE Limited		Singapore		Holding Company		100%		100%
Dlocal Argentina S.A.		Argentina		Collection agent		100%		100%
Demerge Argentina S.A.		Argentina		Service provider		100%		100%
Dlocal Services Arg S.A.		Argentina		Service provider		100%		100%
DLocal Bangladesh Limited		Bangladesh		Collection agent		100%		100%
Demerge Bolivia S.R.L.		Bolivia		Collection agent		100%	(3)	-
Dlocal Brasil Holding Financeira		Brazil		Holding Company		100%		100%
Dlocal Brasil Instituição de Pagamento S.A.		Brazil		Collection agent		100%		100%
Demerge Brasil Facilitadora de Pagamentos Ltda.		Brazil		Collection agent		100%		100%
Webpay Brasil Pagamentos Ltda.		Brazil		Collection agent		100%	(3)	-
Demerge Cameroun SARL		Cameroon		Collection agent		100%	(3)	-
Dlocal Chile SPA		Chile		Collection agent		100%		100%
Demerge Chile SPA		Chile		Collection agent		100%		100%
Pagos y Servicios Limitada		Chile		Collection agent		99%		100%
FCA Chile 2 Spa		Chile		Collection agent		100%	(3)	-
Dlocal Colombia S.A.S.		Colombia		Collection agent		100%		100%
Demerge Colombia S.A.S.		Colombia		Collection agent		100%		100%
W-Collect S.A.S.		Colombia		Collection agent		-	(4)	100%
BH Collect S.A.S.		Colombia		Collection agent		-	(4)	100%
Kupa Colombia S.A.S.		Colombia		Collection agent		100%	(3)	-
Dlocal Costa Rica SRL		Costa Rica		Collection agent		100%	(3)	-
Demerege Ecuador S.A. (1)		Ecuador		Collection agent		100%		0.15%
Dlocal Egypt LLC		Egypt		Collection agent		100%		100%
Dlocal El Salvador S.A de C.V.		El Salvador		Collection agent		100%	(3)	-
Demerge Guatemala S.A.		Guatemala		Collection agent		100%	(3)	-
Dlocal Honduras S.A.		Honduras		Collection agent		100%	(3)	-
Depansum Solutions Private Limited		India		Collection agent		99%		99%
Dlocal India Pvt Limited		India		Collection agent		99.99%		99.99%

 

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Guisol Solutions Private Limited		India		Collection agent		100%	(3)	-
PT Dlocal Solutions Indonesia		Indonesia		Collection agent		100%		100%
Dlocal Israel Limited		Israel		Service provider		100%		100%
Dlocal SARL		Ivory Coast		Collection agent		100%	(3)	-
Demerge Japan Ltd		Japan		Collection agent		66.6%	(3)	-
Dlocal Payments Kenya Limited		Kenya		Collection agent		100%	(3)	-
Depansum Malaysia SDN. BHD.		Malaysia		Collection agent		100.0%	(3)	-
Demerge Mexico S.A. de C.V.		Mexico		Collection agent		99.999%		99.999%
Dlocal Mexico S.A. DE C.V.		Mexico		Collection agent		99.999%		99.999%
Dlocal Technologies Mexico S.A. DE C.V.		Mexico		Service provider		100%		100%
DLocal Morocco SARL AU		Morocco		Collection agent		100%		100%
Demerge Nigeria Limited		Nigeria		Collection agent		100%		100%
Dlocal Panama S.A.		Panama		Collection agent		100%		100%
Dlocal Paraguay S.A.		Paraguay		Collection agent		100%		100%
Demerge Peru S.A.C.		Peru		Collection agent		99%		99%
Demerge República Dominicana SAS		República Dominicana		Collection agent		99.99%		99.99%
Dlocal Rwanda Ltd.		Rwanda		Collection agent		100%	(3)	-
Depansum PTY Limited		South Africa		Collection agent		100%		100%
DLP South Africa PTY Ltd.		South Africa		Collection agent		100%	(3)	-
Dlocal Tanzania LTD		Tanzania		Collection agent		100%	(3)	-
Demerge (Thailand) Co. LTD (2)		Thailand		Collection agent		49%	(3)	-
Dlocal Uganda LTD		Uganda		Collection agent		100%	(3)	-
Dlocal Payment Services L.L.C.		United Arab Emirates		Collection agent		100%	(3)	-
Dlocal US LLC		United States of America		Service provider		100%	(3)	-
CILFUR S.A.		Uruguay		Service provider		100%	(3)	-
Dlocal Vietnam Company Limited		Vietnam		Collection agent		100%	(3)	-

 

(1)	Although Dlocal was the owner of 0.15% of Demerege Ecuador S.A., the Group controls its operations according to the guidelines in IFRS 10. On July 1, 2022, Dlocal acquired the remaining 99.85%.
(2)	Although Dlocal is the owner of 49% of Demerge (Thailand) Co. LTD, the Group controls its operations according to the guidelines in IFRS 10.
(3)	The Group has determined that the acquisition or incorporation of these subsidiaries during 2022 does not constitute a business according to IFRS 3.
(4)	The subsidiary was liquidated during 2022.

 

 

 

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5. Segment reporting

 

The Group operates in a single operating segment, which is “payment processing”. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker, who in the Group’s case is the Executive Team, in deciding how to allocate resources and assess performance. The Executive Team is composed of the Chief Executive Officer (“CEO”), the Chief Operating Officer (“COO”), the Chief Financial Officer (“CFO”) and the President of Dlocal Limited.

 

The Executive Team evaluates the Group’s financial information and resources and assesses the financial performance of these resources on a consolidated basis on the basis of Revenues, Adjusted EBITDA and Adjusted EBITDA margin as further described below.

 

The Group’s revenue, results and assets for this one reportable segment can be determined by reference to the Consolidated Condensed Statement of Comprehensive Income and Consolidated Condensed Statement of Financial Position.

 

As required by IFRS 8 Operating Segments, below are presented applicable entity-wide disclosures related to dLocal’s revenues.

 

Revenue breakdown by region

 

The Group’s revenues arise from operations in 39 countries, where the merchants´ customers are based.

 

Based on the region where payments from/to such customers are processed this is the revenue breakdown:

 

		Nine months ended						Three months ended
		September 30, 2022		September 30, 2021		YoY%		September 30, 2022		September 30, 2021		YoY%
LatAm		252,507		152,239		65.9%		87,329		62,684		39.3%
Asia and Africa		47,990		15,624		207.2%		24,535		5,962		311.5%
Revenues		300,497		167,863		79.0%		111,864		68,646		63.0%

 

Revenue with large customers

 

During the nine months ended September 30, 2022 the Group operated with more than 600 merchants, excluding merchants from DLocal Go & Marketplaces (more than 400 merchants in the nine months ended September 30, 2021).

 

For the nine months ended September 30, 2022, the Group’s revenue from its top 10 merchants represented 52% of revenue (60% of revenue for the nine months ended September 30, 2021). For the nine months ended September 30, 2022 there are no customers (two for the nine months ended September 30, 2021) that on an individual level accounted for more than 10% of the total revenue.

 

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Adjusted EBITDA and Adjusted EBITDA Margin

 

The Executive Team assesses the financial performance of the Group’s sole segment by Revenues, Adjusted EBITDA and Adjusted EBITDA Margin. The Adjusted EBITDA is defined as the consolidated profit from operations before financing and taxation for the year or period, as applicable, before depreciation of property, plant and equipment, amortization of right-of-use assets and intangible assets, and further excluding the changes in fair value of financial assets and derivative financial instruments carried at fair value through profit or loss, impairment gain/loss on financial assets, transaction costs, share-based payment non-cash charges, secondary offering expenses and inflation adjustment. The Group defines Adjusted EBITDA Margin as the Adjusted EBITDA divided by consolidated revenues.

The Group reconciles the segment’s performance measure to profit for the period as presented in the Consolidated Condensed Interim Statements of Comprehensive Income as follows:

 

			Nine months ended				Three months ended
		Note	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Profit for the period			89,333		54,304		32,338		19,669
Income tax expense		11	7,651		5,533		2,287		2,558
Inflation adjustment			905		197		127		156
Interest charges on leases			133		97		(45)		46
Interest income from financial assets at FVPL			(12,371)		(1,289)		(6,835)		(1,095)
Fair value losses on financial assets at FVPL			25		16		25		6
Other operating loss / (gain)		19	706		(2,896)		18		—
Other finance expense			15,732		414		10,022		178
Impairment (gain) / loss on financial assets		14	(106)		8		(24)		(159)
Depreciation and amortization		10	5,690		3,240		2,110		1,381
Secondary offering expenses (i)		8	89		4,442		—		695
Transaction costs (ii)		8	—		665		—		211
Share-based payment non-cash charges, net of forfeitures		9	4,874		5,354		1,599		2,673
Adjusted EBITDA			112,661		70,085		41,622		26,319
Revenues		6	300,497		167,863		111,864		68,646
Adjusted EBITDA			112,661		70,085		41,622		26,319
Adjusted EBITDA Margin			37.5%		41.8%		37.2%		38.3%

 

 

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6. Revenues and Cost of Services

 

(a) Revenue and Gross profit description

 

dLocal derives revenue from processing payments for international merchants to enable them to operate in selected emerging markets.

 

The breakdown of revenue from contracts with customers per type of service is as follows:

 

		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Transaction revenues (i)		278,771		162,078		97,336		66,430
Other revenues (ii)		21,726		5,785		14,528		2,216
Revenues from payment processing (iii)		300,497		167,863		111,864		68,646
Cost of services		(153,432)		(76,361)		(57,992)		(34,202)
Gross profit		147,065		91,502		53,872		34,444

 

 

(b) Revenue recognized at a point in time and over time

 

Transaction revenues are recognized at a point in time when the payment transaction is processed. Other revenues are recognized as revenue at a point in time when the respective performance obligation is satisfied. The Group did not recognize revenues over time for the nine months ended September 30, 2022 and 2021.

 

(c) Cost of services

 

Cost of services are composed of the following:

 

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		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Processing costs (i) (1)		146,190		72,109		55,280		32,371
Hosting expenses (ii)		3,008		2,253		1,053		1,046
Salaries and wages (iii)		998		454		390		195
Amortization of intangible assets (iv)		3,236		1,545		1,269		590
Cost of services		153,432		76,361		57,992		34,202

 

 

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7. Technology and development expenses

 

Technology and development expenses are composed of the following:

 

		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Salaries and wages (i)		2,351		880		682		495
Software licenses (ii)		866		270		419		110
Infrastructure expenses (iii)		1,063		562		341		261
Information and technology security expenses (iv)		261		135		185		62
Other technology expenses		200		385		65		188
Total Technology and development expenses		4,741		2,232		1,692		1,116

 

 

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8. Sales and marketing expenses and General and administrative expenses

 

Sales and marketing expenses and General and administrative expenses are composed of the following:

 

		Nine months ended				Three months ended
Sales and marketing expenses		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Salaries and wages (i)		7,618		3,023		3,026		1,098
Marketing expenses (ii)		1,826		401		446		157
Total Sales and marketing expenses		9,444		3,424		3,472		1,255
General and administrative expenses		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Salaries and wages (iii)		16,058		16,151		5,813		6,230
Third-party services (iv)		7,010		8,863		2,852		2,733
Office expenses (v)		2,214		2,022		879		732
Travel and other operating expenses		3,136		1,349		1,098		401
Amortization and depreciation (vi)		2,454		1,695		841		791
Total General and administrative expenses		30,872		30,080		11,483		10,887

 

 

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9. Employee Benefits

 

As of September 30, 2022, the Group’s FTEs were 712 (532 as of September 30, 2021) where 40% corresponded to information technology and product engineers and related roles (39% as of September 30, 2021). As of September 30, 2022, 566 FTEs were located in America and 146 were located in Africa and Asia (460 and 72, respectively, as of September 30, 2021).

 

Employee benefits is composed of the following:

 

		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Salaries, wages and contractor fees (i)		29,857		19,858		11,102		7,504
Share-based payments (ii)		4,874		5,354		1,599		2,673
Total employee benefits		34,731		25,212		12,701		10,177

 

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10. Amortization and Depreciation

 

Amortization and depreciation expenses are composed of the following:

 

		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Amortization of intangible assets		4,809		2,594		1,793		1,115
Right-of-use asset amortization		351		337		128		129
Depreciation of Property, plant & equipment		530		309		189		137
Total Amortization and Depreciation		5,690		3,240		2,110		1,381

 

For further information related to amortization of intangible assets refer to Note 16: Intangible Assets.

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11. Income Tax

 

Income tax expense is recognized based on management’s estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average income tax rate used for the nine months ended September 30, 2022 is 7.9%, compared to 9.2% for the nine months ended September 30, 2021.

 

The income tax charge recognized in profit and losses is the following:

 

		Nine months ended				Three months ended
Current Income Tax		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Current Income Tax on profits for the period		(8,999)		(5,173)		(2,889)		(2,723)
Total Current Income Tax expense		(8,999)		(5,173)		(2,889)		(2,723)
Deferred income tax		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Increase/(decrease) in deferred income tax assets		968		36		660		176
Decrease/(increase) in deferred income tax liabilities		380		(396)		(58)		(11)
Total Deferred income tax benefit/(expense)		1,348		(360)		602		165
Income Tax expense		(7,651)		(5,533)		(2,287)		(2,558)

 

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12. Capital management

 

(a) Share capital

 

Authorized shares, as well as issued and fully paid-up shares, are presented below:

 

		September 30, 2022				September 30, 2021
		Amount		USD		Amount		USD
Authorized Shares of USD 0.002 USD each
Class A common shares		1,000,000,000		2,000		1,000,000,000		2,000
Class B common shares		250,000,000		500		250,000,000		500
Undesignated shares		250,000,000		500		250,000,000		500
		1,500,000,000		3,000		1,500,000,000		3,000
Issued and Fully Paid Up Shares of USD 0.002 each
Class A Common Shares		161,930,899		324		149,065,490		298
Class B Common Shares		134,054,192		268		145,962,951		292
		295,985,091		592		295,028,441		590
Share Capital evolution
Share Capital as at January 1		295,028,441		590		268,598,000		602
i) Issue of common shares at USD 0.002		956,650		2		19,906,000		45
ii) Par value change		—		—		—		(70)
iii) Issue of ordinary shares at the IPO		—		—		4,411,765		9
iv) Warrant exercise		—		—		2,112,676		4
Share capital as of September 30		295,985,091		592		295,028,441		590

 

The rights of the holders of Class A Common Shares and Class B Common Shares are identical, except with respect to voting, conversion and transfer restrictions applicable to the Class B Common Shares. Each Class A Common Share is entitled to one vote while Class B Common Shares are entitled to five votes each. Each Class B Common Share is convertible into one Class A Common Share automatically upon transfer, subject to certain exceptions. Holders of Class A Common Shares and Class B Common Shares vote together as a single class on all matters unless otherwise required by law.

 

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(b) Capital reserve

 

The Capital reserve corresponds to reserves related to the share-based plans, as described in Note 2.11: Share-based payments and warrants to the Annual Financial Statements for the year ended December 31, 2021. Accordingly, this reserve is related to share-based payment compensation plans of the Group.

 

The following table shows a breakdown of the consolidated condensed interim statement of financial position line item ‘Capital Reserves’ and the movements in these reserves during the periods.

 

		2022		2021
Balances as of January 1		12,741		12,582
Share-options exercise (i)		(4,445)		(6,898)
Share-based payments charges		5,594		5,360
Forfeitures		(720)		(6)
Warrant exercise		—		(533)
Balance as at September 30		13,170		10,505

 

 

 

(c) Other Reserves

 

The reserves for the Group relate to cumulative translation adjustment representing differences on conversion of assets and liabilities at the reporting date.

 

The following table shows a breakdown of the consolidated statement of financial position line item ‘Other Reserves’ and the movements in these reserves during the periods.

 

		2022		2021
		Cumulative Translation Adjustment		Cumulative Translation Adjustment
Balances as of January 1		(30)		119
Movement of other reserves		(1,755)		304
Balance as at September 30		(1,785)		423

 

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(d) Retained Earnings

 

Movements in retained earnings were as follows:

 

		2022		2021
Balance as at January 1		109,867		31,749
Comprehensive income for the period		90,593		54,455
Balance as at September 30		200,460		86,204

 

(e) Earnings per share

 

dLocal calculates basic earnings per share by dividing the profit attributable to equity holders by the weighted average number of common shares issued and outstanding during the nine months ended September 30, 2022 and 2021.

 

For diluted earnings per share is calculated by dividing the profit attributable to equity holders of dLocal by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all dilutive potential common shares into common shares.

 

The next table presents the information used as base for such calculation:

 

		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Profit attributable to common shareholders (U.S. Dollars)		89,326,469		54,291,000		32,462,422		19,663,000
Weighted average number of common shares		295,455,429		284,456,779		295,918,751		293,558,997
Adjustments for calculation of diluted earnings per share(1)		17,783,776		19,609,500		17,246,606		19,646,000
Weighted average number of common shares for calculating diluted earnings per share		313,239,205		304,066,279		313,165,357		313,204,997
Basic earnings per share		0.30		0.19		0.11		0.07
Diluted earnings per share		0.29		0.18		0.10		0.06

 

 

1 For the nine months ended September 30, 2022, the adjustment corresponds to the dilutive effect of i) 14,896,831 average shares related to share-based payment warrants described in Note 2.11: Share-based payments and warrants to the Annual Financial Statements for the year ended December 31, 2021; and ii) 2,886,945 average shares related to share-based payment plans with employees (16,208,500 and 3,401,000 respectively for the nine months ended September 30, 2021). For the three months ended September 30, 2022, the adjustment corresponds to the dilutive effect of i) 14,887,078 average shares related to share-based payment warrants; and ii) 2,359,528 average shares related to share-based payment plans with employees (16,456,000 and 3,190,000 respectively for the three months ended September 30, 2021).

 

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13. Cash and cash equivalents

 

Cash and cash equivalents breakdown is presented below:

 

		September 30, 2022		December 31, 2021
Own Balances		319,987		227,913
Merchant Clients Funds		222,311		108,284
		542,298		336,197

 

As of September 30, 2022, USD 542,298 (USD 336,197 on December 31, 2021) represents cash on hand, demand deposits with financial institutions and other short-term liquid financial instruments.

 

Own Balances correspond to cash and cash equivalents of the Group while Merchant Clients Funds correspond to freely available funds collected from the merchants’ customers, that can be invested in secure, liquid low-risk assets until they are transferred to the merchants in accordance with the agreed conditions with them or transferred to Own Funds accounts for the portion that corresponds to the Group fees. As of September 30, 2022 , Merchant Clients Funds includes USD 13,757 pending to be transferred to Own Funds accounts (USD 7,827 as of December 31, 2021).

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14. Trade and other receivables

 

Trade and Other Receivables of the Group are composed of the following:

 

		September 30, 2022		December 31, 2021
Trade receivables		206,479		179,199
Loss allowance		(216)		(322)
Trade receivables net		206,263		178,877
Advances and other receivables		22,632		12,089
		228,895		190,966

 

Trade Receivables correspond to uncollateralized gross amounts due from acquirers, processors, merchants and preferred suppliers for services performed that will be collected in less than one year, so they are classified as current. No financial assets are past-due and all Trade and other receivables are categorized as within “normal” credit risk rating.

 

Loss allowance and impairment losses

 

The following table presents the evolution of the loss allowance:

 

		2022		2021
Opening book value as at January 1		(322)		(341)
Decrease/(increase) in loss allowance for trade receivables		106		(8)
Write-offs		—		52
Total as at September 30		(216)		(297)
Net impairment gain/(loss) on financial assets		106		(8)

 

Initial recognition and subsequent measurement the Group applies the simplified approach to determine expected credit losses on trade receivables.

 

To measure the expected credit losses, trade and other receivables have been grouped based on shared credit risk characteristics and the days past due (only 0-30 past due bucket as of September 30, 2022 and December 31, 2021 because there are no other material buckets of the outstanding receivables).

 

The expected loss rates are based on the payment profiles of debtors over a period of 36 months before year end and the corresponding historical credit losses experienced within this period. The historical loss rate is adjusted to reflect current and forward-looking information on credit risk ratings of the countries in which the Group sells its services which affects the ability of the debtors to settle the receivables. On that basis, the average expected credit loss rate of the 0-30 past due bucket was determined at 0.2% for the nine months ended September 30, 2022 (0.1% in the nine months ended September 30, 2021).

 

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15. Other Assets

 

Other assets are composed of the following:

 

Current		September 30, 2022		December 31, 2021
Money held in escrow for: (i)		3,153		211
-Requirements for other processors		3,022		80
-Credit card requirements		131		131
Rental guarantees		637		561
Prepaid assets (ii)		108		567
Others		39		—
Total current Other Assets		3,937		1,339

 

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16. Intangible Assets

 

Intangible assets of the Group correspond to acquired software as well as to capitalized expenses related to internally generated software and are stated at cost less accumulated amortization.

 

		2022						2021
		Internally generated software		Acquired intangible assets		Total		Internally generated software		Acquired intangible assets (ii)		Total
Cost		12,387		39,335		51,722		4,987		—		4,987
Accumulated amortization		(3,179)		(1,574)		(4,753)		(834)		—		(834)
Opening book value as at January 1		9,208		37,761		46,969		4,153		—		4,153
Additions (i)		7,715		—		7,715		4,905		39,335		44,240
Amortization of the period		(3,236)		(1,573)		(4,809)		(1,545)		(1,049)		(2,594)
Total as at September 30		13,687		36,188		49,875		7,513		38,286		45,799
Cost		20,102		39,335		59,437		9,892		39,335		49,227
Accumulated amortization		(6,415)		(3,147)		(9,562)		(2,379)		(1,049)		(3,428)

 

 

(i) The additions of the nine months ended September 30, 2022 include USD 7,706 related to capitalized salaries and wages (USD 4,704 as of September 30, 2021).

 

		As of September 30, 2022		As of December 31, 2021
Cost		59,437		51,722
Accumulated amortization		(9,562)		(4,753)
Net book amount		49,875		46,969

 

As of September 30, 2022 , and December 31, 2021 no indicator of impairment related to intangible assets existed, so the Group did not perform an impairment test.

 

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17. Trade and other payables

 

Trade and Other Payables are composed of the following:

 

		September 30, 2022		December 31, 2021
Trade Payables		405,243		269,227
Accrued Liabilities		5,741		3,173
Other Payables		12,622		4,760
Total Trade and other payables		423,606		277,160

 

These payables are classified as current liabilities as the payment is due within one year or less. Moreover, the carrying amounts are considered to be the same as fair values, due to their short – term nature.

 

Trade Payables correspond to liabilities with Merchants, either related to payin transactions processed or payout transactions to be processed at their request. Accrued Liabilities mainly correspond to obligations with legal and tax advisors, and auditors. Other Payables mainly correspond to obligations related to processors´ costs and the acquisitions of office goods and services necessary for the ordinary course of the business.

 

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18. Borrowings

 

During the year 2021, dLocal has received borrowings from a financial institution in Brazilian Reais (BRZ) amounting to USD 5,000 (BRZ 27 million) for working capital, with expiration date on April 19, 2022 and accruing interest at an annual fixed interest rate of 1.85%. The total outstanding as of December 31, 2021 amounts to USD 5,014 and is disclosed in the line "Borrowings". Such borrowings were repaid during April 2022.

 

On April 19, 2022, dLocal has received two borrowings from a financial institution in Brazilian Reais (BRZ 37.5 million each) amounting to a total of USD 15.8 million, with expiration date on January 16, 2023 and accruing interest at an annual variable interest rate equivalent to the Brazilian Interbank Deposit (Certificado de Depósito Interbancário, or “CDI”) rate plus 1.70% and 118.14% of the CDI, respectively. The total outstanding as of September 30, 2022 amounts to USD 14,782 and is disclosed in the line "Borrowings".

 

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19. Tax Liabilities

 

The tax liabilities breakdown is as follows:

 

		September 30, 2022		December 31, 2021
Income tax payable		3,983		1,940
Other tax liabilities		7,902		11,186
Income tax perception		6,084		7,490
Digital services withholding VAT		1,180		2,796
Other Taxes		638		900
Total Tax Liabilities		11,885		13,126

 

 

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20. Derivative financial instruments

 

Other derivative financial instruments

 

During the nine months ended September 30, 2022 and the year-ended December 31, 2021, dLocal entered into short-term derivative contracts (delivery and non-delivery forwards) with different counterparties in different countries in which the Group operates, according to the following detail:

 

Transaction		Type of Forward Transaction		Local currency		Outstanding notional amount in USD as of September 30, 2022		Outstanding balance as of September30, 2022 - Derivative financial assets / (liabilities)		Outstanding notional amount in USD as of December 31, 2021		Outstanding balance as of December 31, 2021 - Derivative financial liabilities
Non-delivery forwards (1)		Buy USD		Brazilian Reais		11,646,399		328		5,500,000		(152)
Non-delivery forwards (1)		Sell USD		Brazilian Reais		(2,390,000)		(1)		—		—
Non-delivery forwards (1)		Buy USD		Argentine Peso		21,000,000		(263)		2,500,000		—
Non-delivery forwards (1)		Sell USD		Argentine Peso		(2,000,000)		208		—		—
Delivery forwards (1)(2)		Buy USD		Chilean Peso		12,821,515		(140)		12,391,928		(8)
Delivery forwards (1)		Buy USD		Uruguayan Peso		1,875,602		30		—		—
Non-delivery forwards (1)		Buy USD		Egyptian Pound		13,881,637		21		—		—
Non-delivery forwards		Buy EUR		Moroccan Dirham		5,715,126		48		—		—
Non-delivery forwards (1)		Buy USD		Nigerian naira		10,306,138		(42)		—		—
Non-delivery forwards (1)		Buy USD		Indian Rupee		2,949,743		2		1,000,000		(14)
Non-delivery forwards (1)		Buy USD		South African Rand		5,737,156		20		4,000,000		(47)
Total								211				(221)

 

(1) During the nine months ended September 30, 2022, dLocal entered into hedge operations of trade and other receivables in Brazilian Reais, Argentine Peso, Chilean Peso, Uruguayan Peso, Egyptian Pound, Nigerian Naira, Indian Rupee, and South African Rand subject to foreign exchange exposure using delivery and non-delivery forward contracts. The transactions have been elected for hedge accounting and classified as fair value hedge in accordance with IFRS 9. The Group has elected to designate only the spot element of these forward contracts as the hedging instrument, except in hedges of Uruguayan Peso and Chilean Peso. During the nine months ended September 30, 2022, dLocal recognized a net gain of USD 11,071 included in the line item "Costs of services" related to the effective portion of the change in the spot rate of the hedged currency and a net loss of USD 11,912 included in the line item "Finance costs" related to the implicit interest rate (a net gain of USD 6,856 and a net loss of USD 7,691, respectively, for the three months ended September 30, 2022).

 

(2) During the last quarter of the year-ended December 31, 2021, dLocal entered into hedge operations of trade and other receivables in Chilean Peso subject to foreign exchange exposure using the delivery forward contracts. The transactions have been elected for hedge accounting and classified as fair value hedge in accordance with IFRS 9.

 

Option to purchase common shares

 

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As of the beginning of the nine months ended September 30, 2021, DLocal Limited had an option agreement in place with one shareholder (“Investor”), pursuant to which the Investor had outstanding options to purchase up to 18,068,000 common shares from certain existing shareholders, or by direct issuance of Company shares, which could be exercised by the Investor on or before December 16, 2021.

 

On March 3, 2021, the investor exercised the right to purchase 18,068,000 Class A Ordinary shares in DLocal Group Limited, by acquiring them from other existing shareholders, without being required the issuance of new shares by dLocal. In this sense, as of March 3, 2021 the obligations of dLocal under this agreement have ceased.

 

Considering that as of December 31, 2020 the derivative financial instrument represented a liability for dLocal of USD 2,896, a gain for the same amount was recognized within Operating profit in the line item “Other operating gain/(loss)” in the Consolidated Condensed Interim Statements of Comprehensive Income for the nine months ended September 30, 2021.

 

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21. Provisions

 

(a) Current or potential proceedings

 

Provisions for the period are related to current or potential proceedings where the management understands, based on the Group’s legal advisors’ assessment, that it is more likely than not that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

(b) Movements in current or potential proceedings

 

Movements in current or potential proceedings are set out below:

 

		2022		2021
Carrying amount as at January 1		1,710		1,393
Reversal to labor provision		(296)		—
Interest charges for labor provision		126		1,016
Carrying amount as at September 30		1,540		2,409

 

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22. Related parties

 

(a) Related Party Transactions

 

Related party transactions are linked to the options agreement that is reflected in Note 20 of these financial statements.

 

(b) Key Management compensation

 

The compensation of the Executive Team during the period can be analyzed as follows:

 

		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Short-term employee benefits – Salaries and wages		2,806		1,527		280		406
Long-term employee benefits – Share-based payment		4,874		4,789		1,599		2,673
		7,680		6,316		1,879		3,079

 

(c) Transactions with other related parties

 

The following transactions occurred with related parties:

 

		Nine months ended				Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Transactions with merchants – Revenues		—		1,177		(8)		660
Transactions with preferred suppliers (Collection agents) – Costs		(581)		(232)		(408)		(28)

 

(d) Outstanding balances arising from transactions with other related parties

 

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:

 

		September 30, 2022		December 31, 2021
Transactions with merchants – accounts payable		—		(622)
Transactions with preferred suppliers (Collection agents) – accounts payable		0		(125)
Transactions with preferred suppliers (Collection agents) – accounts receivable		7,969		6,058

 

All transactions with related parties were made on normal commercial terms and conditions and at market rates. Outstanding balances are unsecured and are repayable in cash.

 

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23. Cash flow disclosures

 

The most significant non-cash transactions are detailed below:

 

		Nine months ended
		September 30, 2022		September 30, 2021
Right-of-use asset recognition with an increase in Lease liabilities		(110)		(3,915)

 

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24. Fair value hierarchy

 

The following tables show financial instruments recognized at fair value for the period ended September 30, 2022 and December 31, 2021, analyzed between those whose fair value is based on:

 

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

 

• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

 

• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based upon observable market data.

 

The table also includes financial instruments measured at amortized cost. The Group understands that the book value of such instruments approximates their fair value.

 

September 30, 2022		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Assets
Financial Assets at Fair Value through Profit or Loss		1,065		—		1,065		1,065		—		—
Other Assets		—		3,937		3,937		—		—		—
Trade and Other Receivables		—		228,895		228,895		—		—		—
Derivative financial instruments		657		—		657		—		657		—
Cash and Cash Equivalents		—		542,298		542,298		—		—		—
		1,722		775,130		776,852		1,065		657		—

 

December 31, 2021		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Assets
Financial Assets at Fair Value through Profit or Loss		1,004		—		1,004		1,004		—		—
Other Assets		—		1,339		1,339		—		—		—
Trade and Other Receivables		—		190,966		190,966		—		—		—
Cash and Cash Equivalents		—		336,197		336,197		—		—		—
		1,004		528,502		529,506		1,004		—		—

 

September 30, 2022		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Liabilities
Trade and Other Payables		—		(423,606)		(423,606)		—		—		—
Financial liabilities		—		(14,782)		(14,782)		—		—		—
Derivative financial instruments		(446)		—		(446)		—		(446)		—
Contingent consideration liability		—		—		—		—		—		—
		(446)		(438,388)		(438,834)		—		(446)		—

 

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December 31, 2021		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Liabilities
Trade and Other Payables		—		(277,160)		(277,160)		—		—		—
Financial liabilities		—		(5,014)		(5,014)		—		—		—
Derivative financial instruments		(221)		—		(221)		—		(221)		—
Contingent consideration liability		(665)		—		(665)		—		—		(665)
		(886)		(282,174)		(283,060)		—		(221)		(665)

 

Level 3 Financial Instruments

 

As of September 30, 2022 and December 31, 2021., the Group has recognized a contingent consideration liability amounting to USD 665, classified in Level 3. The amount of the Level 3 contingent consideration was calculated by the finance team of the Group, using a discounted cash flow analysis, considering the expected cash flows based on terms of the contract, the entity’s knowledge of the business and how the current conditions are likely to impact it. As described in note 1.3.e to the Annual Consolidated Financial Statements, such contingent liability is capped in USD 665 thousands, and was paid on July 29, 2022.

 

There were no changes in level 3 items for the periods ended September 30, 2022 and December 31, 2021. Also, there were no transfer of items between level 2 and level 3, acquisitions, disposals nor gains or losses recognized in profit for the period related to level 3 instruments.

 

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25. Subsequent events

 

On October 26, 2022, the shareholders of the Company held the Annual General Meeting and approved the following resolutions: (1) to resolve, as an ordinary resolution, that Ms. Mariam Toulan shall be elected as director of the Company, following her appointment as interim director by the board of directors of the Company on June 2, 2022; and (2) to resolve, as an ordinary resolution, that the Company’s financial statements and the auditor’s report for the fiscal year ended December 31, 2021 be approved and ratified.

 

On October 27, 2022, Sumita Pandit step down as dLocal's Chief Operating Officer to pursue other opportunities. Ms. Pandit will serve as a consultant for dLocal on an interim basis, ensuring a smooth transition and supporting the company as her responsibilities are effectively transitioned to other team members. Jacobo Singer has been appointed as the new President and Chief Operating Officer of the Company, effective immediately, following the decision of Sumita to step down from that position.

 

In early November 2022, the Company utilized FTX Trading Ltd. (“FTX”) banking services and had deposits of USD 5.6 million whose withdrawals were not processed by FTX yet. On November 11, 2022, FTX filed for Chapter 11 bankruptcy in the United States. dLocal´s management is closely monitoring this situation and assessing the recoverability of this cash position. As of the date of the issuance of these financial statements, we are not working with any other crypto exchange as banking service, and our exposure to the crypto ecosystem is minimal as processing FIA payments for crypto exchanges represented less than 0.3% of our TPV in the third quarter of 2022.

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Exhibit 99.3

 

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Exhibit 99.4

 

 

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