DLO DLocal Ltd

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 August 2023

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 August 15, 2023 - DLocal Limited Reports 2023 Second Quarter Results
99.2		DLocal Limited Unaudited Consolidated Condensed Interim Financial Statements as of June 30, 2023 and for the six-month and three-month periods ended June 30, 2023 and 2022
99.3		Quaterly Report 2023 - dLocal Reports 2023 Second Quarter Financial Results
99.4		dLocal Q2 2023 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: August 16, 2023

 

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Exhibit 99.1

 

 

 

dLocal Reports 2023 Second Quarter Financial Results

Second Quarter 2023

US$4.4 billion Total Payment Volume, up 80% year-over-year and 22% quarter-over-quarter

Revenue of US$161 million, up 59% year-over-year and 17% quarter-over-quarter

148% Net Revenue Retention Rate

Gross Profit of US$71 million, up 43% year-over-year and 14% quarter-over-quarter

Adjusted EBITDA of US$52 million, up 36% year-over-year and 14% quarter-over-quarter

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

Montevideo, Uruguay August 15th, 2023 — DLocal Limited (“dLocal”, “we”, “us”, and “our”) (NASDAQ:DLO), a technology - first payments platform today announced its financial results for the second quarter ended June 30, 2023.

“We delivered another quarter of outstanding results, with double-digit growth across all parameters, compared to last year as well as the previous quarter. Our performance demonstrates the distinctive advantages of our business, from our cutting-edge technology and broad and well-diversified geographic reach to our excellent sales execution and vast market opportunity. We scale focused on long-term profitable growth, and on our unwavering commitment to our customers: building the best payments ecosystem across emerging markets based on our One dLocal model, simplifying complexities for the merchants we serve.

Our merchants recognize the value we add to their business, propelling our growth alongside theirs. During the quarter we experienced strong traction with our platform solution, in particular from marketplaces. Local-to-local volume also increased significantly, reflecting the success and robustness of this solution. Geographically, we witnessed strong growth in Brazil. This high growth in a large and competitive geography such as Brazil underscores the quality of our solution as we continue to gain market share. Brazil is our first market back in 2016 and still presents attractive growth opportunities. Africa and Asia also grew strongly, and we are excited to see certain smaller markets growing at triple-digit rates.

We are very proud of our half year results and we reaffirm our guidance for the year of revenue between US$620 and US$640 million and Adjusted EBITDA between US$200 and US$220 million. We are clearly trading towards the higher end of that guidance in terms of revenue, but prefer to take a conservative approach given the macro environment. Specific changes of circumstances such as the devaluation of the Nigerian Naira affect our revenue number, but not our gross profit. The annual guidance we have provided accounts for close to 50% year-on-year growth at best in class margins. This would be a great outcome for our 2023 results and testament to the resilience and well-diversified business we are building. We reiterate our mid-term guidance of 25%-35% gross profit CAGR and Adjusted EBITDA over gross profit >75%, which are best in class metrics.

In other news, we are delighted to welcome Pedro Arnt as co-CEO. dLocal has a huge opportunity ahead and I am excited about joining forces with Pedro to steer dLocal's next chapter together. The entire dLocal team, and me personally, remain dedicated to scaling the business further, fortifying our position as the emerging markets payments leader, and delivering lasting value for our merchants, consumers, partners and shareholders,” said Sebastian Kanovich, co-CEO of dLocal.

 

 

Second quarter 2023 Financial Highlights

 

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The following table summarizes our key performance metrics:

 

	Three months ended 30 of June			Six months ended 30 of June
	2023	2022	% change	2023	2022	% change
Key Performance metrics	(In millions of US$ except for %)
TPV	4,373	2,433	80%	7,948	4,537	75%
Revenue	161.1	101.2	59%	298.4	188.6	58%
Gross Profit	70.8	49.6	43%	132.6	93.2	42%
Gross Profit margin	44%	49%	-5p.p	44%	49%	-5p.p
Adjusted EBITDA	52.0	38.2	36%	97.5	71.0	37%
Adjusted EBITDA margin	32%	38%	-5p.p	33%	38%	-5p.p
Adjusted EBITDA/Gross Profit	74%	77%	-3p.p	74%	76%	-3p.p

 

Profit	44.8	30.7	46%	80.2	57.0	41%
Profit margin	28%	30%	-3p.p	27%	30%	-3p.p

 

Second quarter 2023 Business Highlights

 

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The table below presents a breakdown of dLocal’s TPV by product and type of flow:

 

In millions of US$ except for %	Three months ended 30 of June				Six months ended 30 of June
	2023	% share	2022	% share	2023	% share	2022	% share
Pay-ins	3,190	73%	1,881	77%	5,693	72%	3,525	78%
Pay-outs	1,184	27%	552	23%	2,255	28%	1,012	22%
Total TPV	4,373	100%	2,433	100%	7,948	100%	4,537	100%

In millions of US$ except for %	Three months ended 30 of June				Six months ended 30 of June
	2023	% share	2022	% share	2023	% share	2022	% share
Cross-border	2,219	51%	1,487	61%	4,179	53%	2,788	61%
Local-to-local	2,154	49%	946	39%	3,769	47%	1,749	39%
Total TPV	4,373	100%	2,433	100%	7,948	100%	4,537	100%

 

The table below presents a breakdown of dLocal’s revenue by geography:

In thousands of US$ except for %	Three months ended 30 of June				Six months ended 30 of June
	2023	% share	2022	% share	2023	% share	2022	% share
Latin America	126.9	79%	87.6	87%	225.1	75%	165.2	88%
Brazil	41.2	26%	20.7	20%	64.0	21%	38.8	21%
Argentina	20.7	13%	23.2	23%	40.7	14%	44.2	23%
Mexico	28.3	18%	16.0	16%	51.0	17%	28.9	15%
Chile	14.2	9%	12.7	13%	28.4	10%	24.8	13%
Other LatAm	22.5	14%	15.0	15%	41.0	14%	28.4	15%
Africa & Asia	34.3	21%	13.6	13%	73.3	25%	23.5	12%
Nigeria	20.4	13%	4.5	4%	47.3	16%	6.1	3%
Other Africa & Asia	13.9	9%	9.1	9%	26.0	9%	17.3	9%
Total Revenue	161.1	100%	101.2	100%	298.4	100%	188.6	100%

 

 

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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 entities

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

 

In thousands of US$	Three months ended 30 of June		Six months ended 30 of June
	2023	2022	2023	2022
Profit for the period	44,791	30,722	80,241	56,995
Income tax expense	8,774	4,151	13,055	5,364
Depreciation and amortization	2,869	1,857	5,384	3,580
Finance income and costs, net	(7,459)	(253)	(8,850)	1,040
Share-based payment non-cash charges	1,421	1,241	3,750	3,275
Secondary offering expenses¹	-	-	-	89
Impairment loss / (gain) on financial assets	(21)	(7)	30	(82)
Inflation adjustment	1,661	472	2,680	778
Other non-recurring costs²	-	-	1,229	-
Adjusted EBITDA	52,036	38,183	97,519	71,039

 

Note: Although Adjusted EBITDA and Adjusted EBITDA Margin may be commonly viewed as non-IFRS measures in other contexts, pursuant to IFRS 8, Adjusted EBITDA and Adjusted EBITDA Margin are treated by dLocal as IFRS measures based on the manner in which dLocal utilizes these measures. 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, transaction expenses and inflation adjustment.

 

1 Corresponds to expenses assumed by dLocal in relation to secondary offerings of its shares which occurred in 2021. 2 It includes non-recurring costs related to an internal review of the allegations made by a short-seller report, including fees from independent counsel, independent global expert services and forensic accounting advisory firm.

 

 

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Earnings per share

We calculate basic earnings per share by dividing the profit attributable to owners of the group by the weighted average number of common shares issued and outstanding during the three-months and six-month periods ended June 30, 2023 and 2022.

Our diluted earnings per share is calculated by dividing the profit attributable to owners of the group 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 a basis for the calculation of our earnings per share:
 

 

	Three months ended 30 of June		Six months ended 30 of June
	2023	2022	2023	2022
Profit attributable to common shareholders (in thousands of US$)	44,697	30,572	80,141	56,864
Weighted average number of common shares	291,700,873	295,393,168	293,403,907	295,219,928
Adjustments for calculation of diluted earnings per share	16,160,368	17,599,775	16,358,508	17,619,241
Weighted average number of common shares for calculating diluted earnings per share	307,861,241	312,992,943	309,762,415	312,839,169
Basic earnings per share	0.15	0.10	0.27	0.19
Diluted earnings per share	0.15	0.10	0.26	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 quarterly financial information in this press release has not been audited.

 

 

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Conference call and webcast

 

dLocal’s management team will host a conference call and audio webcast on August 16th, 2023 at 8:00 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 more than 40 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.

“Cross-border” means a payment transaction whereby dLocal is collecting in one currency and settling into a different currency and/or in a different geography.

“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.

“Local-to-local” means a payment transaction whereby dLocal is collecting and settling in the same currency.

“Net Revenue Retention Rate” or “NRR” is a U.S. dollar-based measure of retention and growth of dLocal’s merchants. NRR is calculated for a period or year by dividing the Current Period/Year Revenue by the Prior Period/Year Revenue. The Prior Period/Year Revenue is the revenue billed by us to all our customers in the prior period. The Current Period/Year Revenue is the revenue billed by us in the current period to the same customers included in the Prior Period/Year Revenue. Current Period/Year Revenue includes revenues from

any upselling and cross-selling across products, geographies, and payment methods to such merchant customers, and is net of any contractions or attrition, in respect of such merchant customers, and excludes revenue from new customers on-boarded in the preceding twelve months. As most of dLocal revenues come from existing merchants, the NRR rate is a key metric used by management, and we believe it is useful for investors in order to assess our retention of existing customers and growth in revenues from our existing customer base.

“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.

“TPV” dLocal presents total payment volume, or TPV, which is an operating metric of the aggregate value of all payments successfully processed through dLocal’s payments platform. Because revenue depends significantly on the total value of transactions processed through the dLocal platform, management believes that TPV is an indicator of the success of dLocal’s global merchants, the satisfaction of their end users, and the scale and growth of dLocal’s business.

 

 

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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 financial information

Consolidated Condensed Statements of Comprehensive Income for the for the three-month and six-month period ended June 30, 2023 and 2022

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

 

	Three months ended 30 of June		Six months ended 30 of June
	2023	2022	2023	2022
Revenues	161,138	101,180	298,425	188,633
Cost of services	(90,378)	(51,541)	(165,828)	(95,440)
Gross profit	70,760	49,639	132,597	93,193
Technology and development expenses	(2,640)	(1,643)	(4,930)	(3,049)
Sales and marketing expenses	(3,106)	(3,128)	(7,963)	(5,972)
General and administrative expenses	(17,268)	(9,095)	(32,548)	(19,389)
Impairment (loss)/gain on financial assets	21	7	(30)	82
Other operating (loss)/gain	-	(688)	-	(688)
Operating profit	47,767	35,092	87,126	64,177
Finance income	18,878	5,530	25,866	5,536
Finance costs	(11,419)	(5,277)	(17,016)	(6,576)
Inflation adjustment	(1,661)	(472)	(2,680)	(778)
Other results	5,798	(219)	6,170	(1,818)
Profit before income tax	53,565	34,873	93,296	62,359
Income tax expense	(8,774)	(4,151)	(13,055)	(5,364)
Profit for the period	44,791	30,722	80,241	56,995
Profit attributable to:
Owners of the Group	44,697	30,572	80,141	56,864
Non-controlling interest	94	150	100	131
Profit for the period	44,791	30,722	80,241	56,995
Earnings per share (in USD)
Basic Earnings per share	0.15	0.10	0.27	0.19
Diluted Earnings per share	0.15	0.10	0.26	0.18
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange difference on translation on foreign operations	1,675	(1,245)	3,163	(83)
Other comprehensive income for the period	1,675	(1,245)	3,163	(83)
Total comprehensive income for the period	46,466	29,477	83,404	56,912
Total comprehensive income for the period
Owners of the Group	46,371	29,327	83,305	56,781
Non-controlling interest	95	150	99	131
Total comprehensive income for the period	46,466	29,477	83,404	56,912

 

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dLocal Limited

Certain interim financial information

Consolidated Condensed Statements of Financial Position as of June 30, 2023 and December 31, 2022

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

	30 of June, 2023	31 of December, 2022
ASSETS
Current Assets
Cash and cash equivalents	549,386	468,092
Financial assets at fair value through profit or loss	51,565	1,295
Trade and other receivables	299,802	240,446
Derivative financial instruments	1,200	1,206
Other assets	44,632	56,789
Total Current Assets	946,585	767,828
Non-Current Assets
Deferred tax assets	809	362
Property, plant and equipment	2,780	2,734
Right-of-use assets	3,694	3,934
Intangible assets	54,920	51,443
Total Non-Current Assets	62,203	58,473
TOTAL ASSETS	1,008,788	826,301
LIABILITIES
Current Liabilities
Trade and other payables	598,013	407,874
Lease liabilities	675	686
Tax liabilities	12,856	11,695
Derivative financial instruments	838	544
Provisions	916	1,473
Total Current Liabilities	613,298	422,272
Non-Current Liabilities
Deferred tax liabilities	3,200	1,016
Lease liabilities	3,292	3,393
Total Non-Current Liabilities	6,492	4,409
TOTAL LIABILITIES	619,790	426,681
EQUITY
Share Capital	578	592
Share Premium	68,550	164,307
Capital Reserve	17,930	16,185
Other Reserves	(6)	(1,448)
Retained earnings	301,856	219,993
Total Equity Attributable to owners of the Group	388,908	399,629
Non-controlling interest	90	(9)
TOTAL EQUITY	388,998	399,620

 

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dLocal Limited

Certain interim financial information

Consolidated Condensed Statements of Cash flows for three-month and six-month period ended June 30, 2023 and 2022

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

 

	Three months ended 30 of June		Six months ended 30 of June
	2023	2022	2023	2022
Cash flows from operating activities
Profit before income tax	53,565	34,873	93,296	62,359
Adjustments:
Interest income from financial instruments	(15,313)	(5,530)	(22,212)	(5,536)
Interest charges for lease liabilities	52	15	95	178
Other finance expense	765	967	1,202	937
Finance expense related to derivative financial instruments	4,634	3,607	9,869	4,773
Net exchange differences	3,551	(5,836)	4,082	(4,346)
Fair value loss on financial assets at fair value through profit or loss	(3,565)	-	(3,654)	-
Amortization of Intangible assets	2,492	1,594	4,668	3,016
Depreciation of Property, plant and equipment	212	153	407	341
Amortization of Right-of-use asset	165	110	309	223
Revenue reduction related to prepaid assets	-	53	-	211
Share-based payment expense, net of forfeitures	1,421	1,241	3,750	3,275
Other operating loss/(gain)	-	(18)	-	(18)
Net Impairment loss/(gain) on financial assets	(21)	(7)	30	(82)
	47,957	31,222	91,842	65,331
Changes in working capital
Increase in Trade and other receivables	(50,312)	21,458	(59,386)	(4,742)
Decrease/(increase) in Other assets	(1,597)	(552)	12,157	(693)
Increase in Trade and other payables	148,761	(11,200)	190,139	58,416
Decrease in Tax Liabilities	(2,279)	(4,521)	(3,341)	(4,721)
(Decrease) / Increase in Provisions	(252)	(186)	(557)	(137)
Cash from operating activities	142,278	36,221	230,854	113,454
Income tax paid	(2,774)	(2,605)	(6,816)	(3,928)
Net cash from operating activities	139,504	33,616	224,038	109,526
Cash flows from investing activities
Acquisition of Property, plant and equipment	(608)	(494)	(657)	(574)
Additions of Intangible assets	(4,339)	(2,217)	(8,145)	(4,726)
Acquisitions of financial asset at FVTPL	(48,139)	-	(48,139)	-
Net collections of/investments in financial assets at FVTPL	478	(900)	1,523	(282)
Interest collected from financial instruments	15,155	5,530	21,975	5,536
Net cash provided by / (used in) investing activities	(37,453)	1,919	(33,443)	(46)
Cash flows from financing activities
Repurchase of shares	(61,011)	-	(97,929)	-
Share-options exercise	84	548	153	906
Proceeds from borrowings	-	14,656	-	14,656
Repayment of borrowings	-	(5,364)	-	(5,364)
Interest payments on lease liability	(52)	(15)	(95)	(178)
Principal payments on lease liability	(146)	(55)	(276)	(147)
Finance expense paid related to derivative financial instruments	(9,184)	-	(11,337)	-
Other finance expense paid	(768)	(1,142)	(1,205)	(1,179)
Net cash (used in) / provided by financing activities	(71,077)	8,628	(110,689)	8,694
Net increase in cash flow	30,975	44,163	79,906	118,174
Cash and cash equivalents at the beginning of the period	517,892	410,064	468,092	336,197
Net increase in cash flow	30,975	44,163	79,906	118,174
Effects of exchange rate changes on cash and cash equivalents	519	(242)	1,388	(386)
Cash and cash equivalents at the end of the period	549,386	453,985	549,386	453,985

 

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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 was 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 herein corresponds to dLocal Malta, our predecessor. This reorganization was done, among other reasons, 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 June 30, 2023 and for the six-month and three-month periods ended June 30, 2023 and 2022

 

 

 

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DLocal Limited

Consolidated Condensed Interim Statements of Comprehensive Income

For the six-month and three-month periods ended June 30, 2023 and 2022

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

 

				Six months ended								Three months ended
		Notes		June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
Continuing operations
Revenues		6			298,425				188,633				161,138				101,180
Cost of services		6			(165,828	)			(95,440	)			(90,378	)			(51,541	)
Gross profit					132,597				93,193				70,760				49,639
Technology and development expenses		7			(4,930	)			(3,049	)			(2,640	)			(1,643	)
Sales and marketing expenses		8			(7,963	)			(5,972	)			(3,106	)			(3,128	)
General and administrative expenses		8			(32,548	)			(19,389	)			(17,268	)			(9,095	)
Impairment (loss) / gain on financial assets		15			(30	)			82				21				7
Other operating loss					—				(688	)			—				(688	)
Operating profit					87,126				64,177				47,767				35,092
Finance income		11			25,866				5,536				18,878				5,530
Finance costs		11			(17,016	)			(6,576	)			(11,419	)			(5,277	)
Inflation adjustment		11			(2,680	)			(778	)			(1,661	)			(472	)
Other results					6,170				(1,818	)			5,798				(219	)
Profit before income tax					93,296				62,359				53,565				34,873
Income tax expense		12			(13,055	)			(5,364	)			(8,774	)			(4,151	)
Profit for the period					80,241				56,995				44,791				30,722
Profit attributable to:
Owners of the Group					80,141				56,864				44,697				30,572
Non-controlling interest					100				131				94				150
Profit for the period					80,241				56,995				44,791				30,722
Earnings per share
Basic Earnings per share		13			0.27				0.19				0.15				0.10
Diluted Earnings per share		13			0.26				0.18				0.15				0.10
Other comprehensive Income
Items that may be reclassified to profit or loss:
Exchange difference on translation on foreign operations					3,163				(83	)			1,675				(1,245	)
Other comprehensive income for the period, net of tax					3,163				(83	)			1,675				(1,245	)
Total comprehensive income for the period					83,404				56,912				46,466				29,477
Total comprehensive income for the period is attributable to:
Owners of the Group					83,305				56,781				46,371				29,327
Non-controlling interest					99				131				95				150
Total comprehensive income for the period					83,404				56,912				46,466				29,477

 

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 June 30, 2023 and December 31, 2022

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

 

		Notes		June 30, 2023		December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents		14		549,386		468,092
Financial assets at fair value through profit or loss		15		51,565		1,295
Trade and other receivables		16		299,802		240,446
Derivative financial instruments		21		1,200		1,206
Other assets		17		44,632		56,789
Total Current Assets				946,585		767,828
Non-Current Assets
Deferred tax assets				809		362
Property, plant and equipment				2,780		2,734
Right-of-use assets				3,694		3,934
Intangible assets		18		54,920		51,443
Total Non-Current Assets				62,203		58,473
TOTAL ASSETS				1,008,788		826,301
LIABILITIES
Current Liabilities
Trade and other payables		16		598,013		407,874
Lease liabilities				675		686
Tax liabilities		20		12,856		11,695
Derivative financial instruments		21		838		544
Provisions		22		916		1,473
Total Current Liabilities				613,298		422,272
Non-Current Liabilities
Deferred tax liabilities				3,200		1,016
Lease liabilities				3,292		3,393
Total Non-Current Liabilities				6,492		4,409
TOTAL LIABILITIES				619,790		426,681
EQUITY
Share Capital		13		578		592
Share Premium		13		68,550		164,307
Capital Reserve		13		17,930		16,185
Other Reserves		13		(6)		(1,448)
Retained earnings		13		301,856		219,993
Total Equity Attributable to owners of the Group				388,908		399,629
Non-controlling interest				90		(9)
TOTAL EQUITY				388,998		399,620

 

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 six-month periods ended June 30, 2023 and 2022

(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, 2023				592		164,307		16,185		(1,448)		219,993		399,629		(9)		399,620
Comprehensive Income for the period
Profit of the period				—		—		—		—		80,141		80,141		100		80,241
Exchange difference on translation on foreign operations				—		—		—		1,442		1,722		3,164		(1)		3,163
Total Comprehensive Income for the period				—		—		—		1,442		81,863		83,305		99		83,404
Transactions with Group owners in their capacity as owners
Share-options exercise		13		—		2,158		(2,005)		—		—		153		—		153
Share-based payments		9		—		—		3,750		—		—		3,750		—		3,750
Repurchase of shares		13		(14)		(97,915)		—		—		—		(97,929)		—		(97,929)
Transactions with Group owners in their capacity as owners				(14)		(95,757)		1,745		—		—		(94,026)		—		(94,026)
Balance as of June 30, 2023				578		68,550		17,930		(6)		301,856		388,908		90		388,998
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				—		—		—		—		56,864		56,864		131		56,995
Exchange difference on translation on foreign operations				—		—		—		(528)		445		(83)		—		(83)
Total Comprehensive Income for the period				—		—		—		(528)		57,309		56,781		131		56,912
Transactions with Group owners in their capacity as owners
Share-options exercise		13		2		6,352		(3,640)		—		—		2,714		—		2,714
Forfeitures		13		—		—		(331)		—		—		(331)		—		(331)
Share-based payments		9		—		—		3,606		—		—		3,606		—		3,606
Transactions with Group owners in their capacity as owners				2		6,352		(365)		—		—		5,989		—		5,989
Balance as of June 30, 2022				592		163,503		12,376		(558)		167,176		343,089		113		343,202

 

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 six-month periods ended June 30, 2023 and 2022

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

 

				Six months ended
		Notes		June 30, 2023		June 30, 2022
Cash flows from operating activities
Profit before income tax				93,296		62,359
Adjustments:
Interest income from financial instruments		11		(22,212)		(5,536)
Interest charges for lease liabilities		11		95		178
Other finance expense		11		1,202		937
Finance expense related to derivative financial instruments		11		9,869		4,773
Net exchange differences		11		4,082		(4,346)
Fair value gain on financial assets at fair value through profit or loss		11		(3,654)		—
Amortization of Intangible assets		10		4,668		3,016
Depreciation of Property, plant and equipment		10		407		341
Amortization of Right-of-use asset		10		309		223
Revenue reduction related to prepaid assets		16		—		211
Share-based payment expense, net of forfeitures		9		3,750		3,275
Other operating loss				—		(18)
Net Impairment loss/(gain) on financial assets		16		30		(82)
				91,842		65,331
Changes in working capital
Increase in Trade and other receivables		16		(59,386)		(4,742)
Decrease/(increase) in Other assets		17		12,157		(693)
Increase in Trade and other payables		19		190,139		58,416
Decrease in Tax Liabilities		20		(3,341)		(4,721)
Decrease in Provisions		22		(557)		(137)
Cash from operating activities				230,854		113,454
Income tax paid		12		(6,816)		(3,928)
Net cash from operating activities				224,038		109,526
Cash flows from investing activities
Acquisitions of Property, plant and equipment				(657)		(574)
Additions of Intangible assets		18		(8,145)		(4,726)
Acquisition of financial assets at FVPL		15		(48,139)		—
Net collections of financial assets at FVPL				1,523		(282)
Interest collected from financial instruments				21,975		5,536
Net cash used in investing activities				(33,443)		(46)
Cash flows from financing activities
Repurchase of shares		13		(97,929)		—
Share-options exercise				153		906
Borrowings proceeds				—		14,656
Borrowings repayments				—		(5,364)
Interest payments on lease liability				(95)		(178)
Principal payments on lease liability				(276)		(147)
Finance expense paid related to derivative financial instruments				(11,337)		—
Other finance expense paid				(1,205)		(1,179)
Net cash (used in)/provided by financing activities				(110,689)		8,694
Net increase in cash flow				79,906		118,174
Cash and cash equivalents at the beginning of the period				468,092		336,197
Effects of exchange rate changes on cash and cash equivalents				1,388		(386)
Cash and cash equivalents at the end of the period				549,386		453,985

 

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 June 30, 2023

(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 payment transactions, enabling 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 these 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 40.
 

 

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 operates and may be licensed, as applicable, in 40 countries 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 Fifth Anti-Money Laundering Directive (Directive (EU) 2018/843, “MLD5”) and the amended texts of the proposed Anti-Money Laundering Regulation (“AMLR”).

 

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1.2. Significant events during the period

Class action lawsuits

On February 23 and February 28, 2023, respectively, DLocal Limited was named, along with several of its senior executives and/or directors, as defendant in certain putative class action lawsuits filed in the Supreme Court of the State of New York, New York County, asserting claims under Sections 11, 12, and 15 of the Securities Act of 1933 based in significant part on the short-seller report mentioned in note 1.3.e). These matters, captioned Zappia et al. v. DLocal Limited et al., Index No. 151778/2023 (Sup. Ct. N.Y. Cty.), and Hunt et al. v. DLocal Limited et al., Index No. 651058/2023 (Sup. Ct. N.Y. Cty.), allege, among other things, that the registration statement for our June 2021 initial public offering reflected certain material misstatements or omissions.

On March 3, 2023, plaintiffs in the two Actions filed a stipulation and proposed order consolidating the cases and appointing putative lead counsel, which application remains pending. The parties also agreed to a schedule for plaintiffs’ filing of an amended complaint and a subsequent briefing schedule for a motion to dismiss the amended complaint.

 

On May 12, 2023, plaintiffs in the Zappia and Hunt actions jointly filed a consolidated amended complaint. On July 11, 2023, Dlocal filed a motion to dismiss the complaint. Plaintiffs’ brief in opposition to such motion will be due on August 15, 2023 and dLocal’s reply brief in further support of the motion will be due on September 22, 2023.

Due to the preliminary posture of the Actions as of the date of issuance of these consolidated condensed interim financial statements, the Company is unable to evaluate the likelihood of an adverse outcome or estimate a range of potential losses. DLocal Limited intends to defend itself vigorously in these actions.

 

Developments in Argentina
 

On April 20, 2023, the Central Bank in Argentina issued Comunicacion “A” 7746, which amends certain foreign exchange regulations and establishes procedures to obtain foreign currency for the settlement of certain professional, advertising services and other business services. On April 27, 2023, General Resolution No. 5351 was published, modifying Argentina’s System for Imports and Payments of Services Abroad (Sistema de Importaciones de la República Argentina y Pagos de Servicios al Exterior) (“SIRASE”) regime and establishing that all SIRASE applications must be approved by the Secretary of Commerce. The approval of certain of the Company’s expatriation requests submitted after April 20 are outstanding as of the date of the issuance of these condensed interim financial statements. Management continues to monitor the situation in close communication with our merchants.

 

In addition, during 2023 certain administrative and judicial inquiries have been initiated against DLocal Argentina S.A. These inquiries do not seek financial penalties at this stage. The Management and its legal advisors consider that the activities of the Company and its representatives were carried out in compliance with applicable laws and regulations, including compliance with foreign exchange market and tax regulations. Because of this and given the incipient nature of the inquiry, no provision for contingencies have been recorded for the aforementioned matters.

 

In June 2023, the Company announced that given the magnitude of dLocal’s business in Argentina, dLocal intended to show additional economic substance with its plan to hire approximately 100 people over the next year and 300 people in the medium-term in the country and to make an aggregate investment over time of up to USD100 million in Argentina, including through locally issued Argentinian federal government bonds US Dollar linked that may be used locally to fulfill operating expenses and local investments according to the company's strategy. On June 14, 2023, the Company acquired with own funds 48,540,361 bonds issued by the Treasury department of Argentina through a public bidding process (see note 15 Financial Assets at Fair Value through profit or loss). On

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July 31, 2023, the Company made a second purchase of bonds issued by the Treasury department of Argentina through a public bidding process, for a total amount of 49,564. These bonds are U.S. linked with a coupon rate of 0.4% and a maturity date of April 2024.

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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 six months ended June 30, 2023 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, 2022 (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 six months ended June 30, 2023 were authorized for issuance by the dLocal’s Board of Directors on August 15, 2023.

 

2.2. Share-based payments

 

During the six months ended June 30, 2023 , 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:

 

		June 30, 2023				December 31, 2022
		Average				Average
		exercise price		Number of		exercise price		Number of
		(U.S. Dollars)		options and RSUs		(U.S. Dollars)		options and RSUs
At the beginning of the period		8.30		3,534,561		1.16		4,032,345
Granted during the period		15.99		1,073,322		18.90		1,474,463
Exercised during the period		0.68		(253,572)		3.45		(1,136,375)
Cancelled during the period		0.002		(13,428)		—		—
Forfeited during the period		14.06		(235,173)		10.31		(835,872)
At the end of the period		10.48		4,105,710		8.30		3,534,561
Vested and exercisable at the end of the period		6.84		509,553		4.06		347,788

 

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

 

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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:

 

Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback

 

On September 22, 2022, the IASB issued Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)' with amendments that clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. This amendment is effective for annual periods beginning on or after January 1, 2024. Earlier application is permitted. The Company has not opted for early application. The management of the Company does not anticipate that the application of this amendment will have a material impact on the Company's consolidated financial statements.
 

 

Amendments to IAS 1 - Non-current Liabilities with Covenants
 

 

On October 31, 2022, the IASB issued 'Non-current Liabilities with Covenants (Amendments to IAS 1)' to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. This amendment is effective for annual periods beginning on or after January 1, 2024. Earlier application is permitted. The Company has not opted for early application. The management of the Company does not anticipate that the application of this amendment will have a material impact on the Company's consolidated financial statements.

 

Amendments to IAS 12 - International Tax Reform(Pillar Two Model Rules)

 

On May 23, 2023, the IASB issued 'International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12)' to respond to stakeholders’ concerns about the potential implications of the imminent implementation of the OECD pillar two model rules on the accounting for income taxes. This amendment is effective for annual periods beginning on or after January 1, 2023. The management of the Company does not anticipate that the application of this amendment will have a material impact on the Company's consolidated financial statements.

 

Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements

 

On May 25, 2023, the IASB issued 'Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)' to add disclosure requirements, and ‘signposts’ within existing disclosure requirements, that ask entities to provide qualitative and quantitative information about supplier finance arrangements. This amendment is effective for annual periods beginning on or after January 1, 2024. Earlier application is permitted. The Company has not opted for early application. The management of the Company does not anticipate that the application of this amendment will have a material impact on the Company’s consolidated financial statements.

 

The Group did not change its accounting policies or make retrospective adjustments as a result of new accounting standards made applicable on January 1, 2023.

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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 condensed interim financial statements of the Group include the following subsidiaries, each of which serves a different vertical or a specific service according to the needs of the Group:

 

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						% of equity interest held by Dlocal
Entity name		Country of incorporation		Principal activities		June 30, 2023		December 31, 2022
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%		100%
Dlocal LLP		United Kingdom		Payments provider		99.999%		99.999%
Dlocal Corp LLP		United Kingdom		Payments provider		99.999%		99.999%
Dlocal OpCo UK LTD		United Kingdom		Payments provider		100%		100%
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 Arg S.A.		Argentina		Service provider		100%		100%
Dlocal Services S.A.		Argentina		Service provider		100%		100%
Demerge Services S.A.		Argentina		Service provider		100%		100%
Depansum Arg S.A.		Argentina		Service provider		100%	(2)	-
DLocal Developments Arg S.A.		Argentina		Service provider		100%	(2)	-
DLocal Bangladesh Limited		Bangladesh		Collection agent		100%		100%
Demerge Bolivia S.R.L.		Bolivia		Collection agent		100%		100%
Dlocal Brasil Holding Financeira Ltda.		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%		100%
Demerge Cameroun SARL		Cameroon		Collection agent		100%		100%
Dlocal Chile SPA		Chile		Collection agent		100%		100%
Demerge Chile SPA		Chile		Collection agent		100%		100%
Pagos y Servicios Limitada		Chile		Collection agent		99%		99%
FCA CL 2 SpA		Chile		Collection agent		100%		100%
Dlocal Colombia S.A.S.		Colombia		Collection agent		100%		100%
Demerge Colombia S.A.S.		Colombia		Collection agent		100%		100%
Kupa Colombia S.A.S.		Colombia		Collection agent		100%		100%
Dlocal Costa Rica SRL		Costa Rica		Collection agent		100%		100%
Demerege Ecuador S.A.		Ecuador		Collection agent		100%		100%
Dlocal Egypt LLC		Egypt		Collection agent		100%		100%
Dlocal El Salvador S.A de C.V.		El Salvador		Collection agent		100%		100%
dLocal Ghana Limited Company		Ghana		Collection agent		100%		100%
Demerge Guatemala S.A.		Guatemala		Collection agent		100%		100%
Dlocal Honduras S.A.		Honduras		Collection agent		100%		100%
Depansum Solutions Private Limited		India		Collection agent		99.99%		99.99%
Dlocal India Pvt Limited		India		Collection agent		99.99%		99.99%
Guisol Solutions Private Limited		India		Collection agent		100%		100%
PT Dlocal Solutions Indonesia		Indonesia		Collection agent		100%		100%
PT Dlocal Services Gateway		Indonesia		Collection agent		85%	(2)	-
PT Dlocal Payment Solutions Indonesia		Indonesia		Collection agent		85%	(2)	-
Dlocal Opco Ireland Ltd		Ireland		Payments provider		100%	(2)	-
Dlocal Israel Limited		Israel		Service provider		100%		100%
Dlocal SARL		Ivory Coast		Collection agent		100%		100%
Demerge Japan Ltd		Japan		Collection agent		66.6%		66.6%
Dlocal Payments Kenya Limited		Kenya		Collection agent		100%		100%

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Depansum Limited		Kenya		Collection agent		99%	(2)	-
Depansum Malaysia SDN. BHD.		Malaysia		Collection agent		100.0%		100.0%
Demerge Mexico S.A. de C.V.		Mexico		Collection agent		99.9%		99.9%
Dlocal Mexico S.A. DE C.V.		Mexico		Collection agent		99.9%		99.9%
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%
Depansum Perú S.A.C		Peru		Collection agent		100%		100%
Dlocal Payments Philippines Incorporated		Philippines		Collection agent		100%		100%
Demerge República Dominicana SAS		República Dominicana		Collection agent		99.99%		99.99%
Dlocal Rwanda Ltd.		Rwanda		Collection agent		100%		100%
Demerge Senegal SUARL		Senegal		Collection agent		100%	(2)	-
Depansum PTY Limited		South Africa		Collection agent		100%		100%
DLP South Africa PTY Ltd.		South Africa		Collection agent		100%		100%
Demerge España SL		Spain		Service provider		100%	(2)	-
Dlocal Tanzania LTD		Tanzania		Collection agent		100%		100%
Demerge (Thailand) Co. LTD (1)		Thailand		Collection agent		49%		49%
Dlocal Uganda LTD		Uganda		Collection agent		100%		100%
Dlocal Payment Services L.L.C.		United Arab Emirates		Collection agent		100%		100%
Dlocal US LLC		United States of America		Service provider		100%		100%
CILFUR S.A.		Uruguay		Service provider		100%		100%
DEMERGE URUGUAY S.A. (Formerly 'Maubek S.A.')		Uruguay		Service provider		100%		100%
DLOCAL SERVICES URUGUAY S.A. (Formerly 'Harpot S.A.')		Uruguay		Collection agent		100%		100%
Dlocal Vietnam Company Limited		Vietnam		Collection agent		100%		100%

 

(1)	Although Dlocal is the owner of 49% of Demerge (Thailand) Co. LTD, the Group controls its operations according to the guidelines in IFRS 10.
(2)	The Group has determined that the acquisition or incorporation of this subsidiary during 2023 does not constitute a business according to IFRS 3.

 

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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 Co-President and Chief Operating Officer (“COO”), the Co-President and Chief Strategy Officer and the Chief Financial Officer (“CFO”).



The Executive Team evaluates the Group’s financial information and resources and assess 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.

 

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 inflation adjustment, other operating gain/loss, impairment gain/loss on financial assets, secondary offering expenses, transaction costs, other non-recurring costs and share-based payment non-cash charges. 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:

 

			Six months ended				Three months ended
		Note	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Profit for the period (1)			80,241		56,995		44,791		30,722
Income tax expense		12	13,055		5,364		8,774		4,151
Inflation adjustment		11	2,680		778		1,661		472
Finance income		11	(25,866)		(5,536)		(18,878)		(5,530)
Finance costs		11	17,016		6,576		11,419		5,277
Depreciation and amortization		10	5,384		3,580		2,869		1,857
Impairment gain on financial assets		16	30		(82)		(21)		(7)
Secondary offering expenses (2)		8	—		89		—		—
Other non-recurring costs (3)		8	1,229		—		—		—
Share-based payment non-cash charges, net of forfeitures		9	3,750		3,275		1,421		1,241
Adjusted EBITDA			97,519		71,039		52,036		38,183
Revenues		6	298,425		188,633		161,138		101,180
Adjusted EBITDA			97,519		71,039		52,036		38,183
Adjusted EBITDA Margin			32.7%		37.7%		32.3%		37.7%

 

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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 40 countries, where the merchants´ customers are based.

 

The table below shows the revenue breakdown based on the region where the payments from/to the merchant customers are processed in countries for which Revenue represented at least 10% of Total Revenues during the preceding four quarters:


 

 

		Six months ended						Three months ended
		June 30, 2023		June 30, 2022		YoY%		June 30, 2023		June 30, 2022		YoY%
LatAm		225,115		165,178		36.3%		126,877		87,571		44.9%
Brazil		64,030		38,795		65.0%		41,213		20,719		98.9%
Mexico		51,009		28,928		76.3%		28,303		15,995		76.9%
Argentina		40,732		44,239		(7.9)%		20,709		23,166		(10.6)%
Chile		28,385		24,821		14.4%		14,153		12,687		11.6%
Other countries		40,959		28,395		44.2%		22,499		15,004		50.0%
Asia and Africa		73,310		23,455		212.6%		34,261		13,609		151.8%
Nigeria		47,293		6,066		679.6%		20,365		4,429		359.8%
Other countries		26,017		17,389		49.6%		13,896		9,180		51.4%
Revenues		298,425		188,633		58.2%		161,138		101,180		59.3%

 

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Revenue with large customers

 

During the six months ended June 30, 2023 the Group operated with more than 600 merchants (more than 590 merchants in the six months ended June 30, 2022).

 

For the six months ended June 30, 2023, the Group’s revenue from its top 10 merchants represented 58% of revenue (51% of revenue for the six months ended June 30, 2022). For the six months ended June 30, 2023 there is one customer (no customers for the six months ended June 30, 2022) that on an individual level accounted for more than 10% of the total revenue.

 

Non current assets by country
 

 

The Company does not have any non-current assets located in the entity´s country of domicile.

Material non-current assets are the Intangible Assets described in Note 18: Intangible Assets.

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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:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Transaction revenues (i)		294,205		187,281		158,696		100,553
Other revenues (ii)		4,220		1,352		2,442		627
Revenues from payment processing (iii)		298,425		188,633		161,138		101,180
Cost of services		(165,828)		(95,440)		(90,378)		(51,541)
Gross profit		132,597		93,193		70,760		49,639

 

 

As described in note 2.14 to the Annual Consolidated Financial Statements for the year ended December 31, 2022, the Group previously presented its revenue from installments, chargebacks, refunds and invoice processing fees as “Other revenues”. However, management considers it to be more relevant if all revenues that are driven by payments processed volumes are presented in one separate line item as “Transaction revenues”. Prior year comparatives as of June 30, 2022 have been restated by reclassifying USD 5,846 from “Other revenue” to “Transaction revenues”.

 

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

 

Transaction revenues are recognized at a point in time when the payment transaction, or its reversal in the case of chargeback and refunds, 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 six months ended June 30, 2023 and 2022.

 

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(c) Cost of services

 

Cost of services are composed of the following:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Processing costs (i)		158,249		90,910		86,446		49,117
Hosting expenses (ii)		3,021		1,955		1,463		1,028
Salaries and wages (iii)		939		608		502		327
Amortization of intangible assets (iv)		3,619		1,967		1,967		1,069
Cost of services		165,828		95,440		90,378		51,541

 

 

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7. Technology and development expenses

 

Technology and development expenses are composed of the following:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Salaries and wages (i)		2,231		1,669		1,228		845
Software licenses (ii)		1,334		447		665		289
Infrastructure expenses (iii)		985		722		543		414
Information and technology security expenses (iv)		130		76		54		39
Other technology expenses		250		135		150		56
Total Technology and development expenses		4,930		3,049		2,640		1,643

 

 

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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:

 

		Six months ended				Three months ended
Sales and marketing expenses		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Salaries and wages (i)		5,969		4,592		2,447		2,330
Marketing expenses (ii)		1,994		1,380		659		798
Total Sales and marketing expenses		7,963		5,972		3,106		3,128
General and administrative expenses		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Salaries and wages (iii)		15,527		10,245		8,379		4,665
Third-party services (iv)		9,022		4,158		4,448		1,978
Office expenses (v)		1,940		1,335		1,033		669
Travel and other operating expenses		4,294		2,038		2,506		995
Amortization and depreciation (vi)		1,765		1,613		902		788
Total General and administrative expenses		32,548		19,389		17,268		9,095

 

 

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9. Employee Benefits

 

As of June 30, 2023, the Group’s FTEs were 806 (632 as of June 30, 2022) where 39% corresponded to information technology and product engineers and related roles (35% as of June 30, 2022).

 

Employee benefits is composed of the following:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Salaries, wages and contractor fees (i)		29,061		18,755		15,474		9,409
Share-based payments (ii)		3,750		3,275		1,421		1,241
Total employee benefits		32,811		22,030		16,895		10,650

 

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10. Amortization and Depreciation

 

Amortization and depreciation expenses are composed of the following:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Amortization of intangible assets		4,668		3,016		2,492		1,594
Right-of-use asset amortization		309		223		165		110
Depreciation of Property, plant & equipment		407		341		212		153
Total Amortization and Depreciation		5,384		3,580		2,869		1,857

 

For further information related to amortization of intangible assets refer to Note 18: Intangible Assets.

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11. Other Results

 

Other results is composed of the following categories:
 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Interest Income from Financial Instruments (i)		22,212		5,536		15,313		5,530
Fair value gains of financial assets at FVPL (i)		3,654		—		3,565		—
Finance income		25,866		5,536		18,878		5,530
		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Finance expense related to derivative financial instruments (ii)		(11,637)		(4,773)		(7,051)		(3,607)
Other finance expenses (iii)		(5,284)		(1,625)		(4,316)		(1,655)
Interest charges for lease liabilities (iv)		(95)		(178)		(52)		(15)
Finance costs		(17,016)		(6,576)		(11,419)		(5,277)
Inflation adjustment (v)		(2,680)		(778)		(1,661)		(472)
Other results		6,170		(1,818)		5,798		(219)

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12. 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 six months ended June 30, 2023 is 14.0%, compared to 8.6% for the six months ended June 30, 2022. The effective income tax rate increase is explained by an increase in the results of subsidiaries located in countries where the income tax rate is higher.

 

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

 

		Six months ended				Three months ended
Current Income Tax		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Current Income Tax on profits for the period		(11,318)		(6,110)		(7,687)		(4,145)
Total Current Income Tax expense		(11,318)		(6,110)		(7,687)		(4,145)
Deferred income tax		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Increase in deferred income tax assets		447		308		261		(137)
(Increase)/decrease in deferred income tax liabilities		(2,184)		438		(1,348)		131
Total Deferred income tax (expense)/benefit		(1,737)		746		(1,087)		(6)
Income Tax expense		(13,055)		(5,364)		(8,774)		(4,151)

 

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13. Capital management

 

(a) Share capital

 

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

 

		June 30, 2023				June 30, 2022
		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		155,193,014		310		161,740,749		324
Class B Common Shares		134,054,192		268		134,054,192		268
		289,247,206		578		295,794,941		592
Share Capital evolution
Share Capital as at January 1		296,029,870		592		295,028,441		590
i) Issue of common shares at USD 0.002		253,572		—	*	766,500		2
ii) Repurchase of shares		(7,036,236)		(14)		—		—
Share capital as of June 30		289,247,206		578		295,794,941		592

 

* Amounts are rounded to the nearest thousand and should not be interpreted as zero.

 

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, 2022. 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.

 

		2023		2022
Balances as of January 1		16,185		12,741
Share-options exercise (i)		(2,005)		(3,640)
Share-based payments charges		3,750		3,606
Forfeitures		—		(331)
Balance as at June 30		17,930		12,376

 

 

 

(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.

 

		2023		2022
		Cumulative Translation Adjustment		Cumulative Translation Adjustment
Balances as of January 1		(1,448)		(30)
Movement of other reserves		1,442		(528)
Balance as at June 30		(6)		(558)

 

(d) Retained Earnings

 

Movements in retained earnings were as follows:

 

		2023		2022
Balance as at January 1		219,993		109,867
Comprehensive income for the period		81,863		57,309
Balance as at June 30		301,856		167,176

 

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(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 six months ended June 30, 2023 and 2022.

 

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:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Profit attributable to common shareholders (U.S. Dollars)		80,141,000		56,864,047		44,697,412		30,572,332
Weighted average number of common shares		293,403,907		295,219,928		291,700,873		295,393,168
Adjustments for calculation of diluted earnings per share(1)		16,358,508		17,619,241		16,160,368		17,599,775
Weighted average number of common shares for calculating diluted earnings per share		309,762,415		312,839,169		307,861,241		312,992,943
Basic earnings per share		0.27		0.19		0.15		0.10
Diluted earnings per share		0.26		0.18		0.15		0.10

 

 

1 For the six months ended June 30, 2023, the adjustment corresponds to the dilutive effect of i) 14,612,059 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, 2022; and ii) 1,746,449 average shares related to share-based payment plans with employees (14,901,568 and 2,717,673 respectively for the six months ended June 30, 2022). For the three months ended June 30, 2023, the adjustment corresponds to the dilutive effect of i) 14,555,263 average shares related to share-based payment warrants; and ii) 1,605,105 average shares related to share-based payment plans with employees (14,874,498 and 2,725,277 respectively for the three months ended June 30, 2022).

 

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14. Cash and cash equivalents

 

Cash and cash equivalents breakdown is presented below:

 

		June 30, 2023		December 31, 2022
Own Balances		176,664		247,833
Merchant Clients Funds		372,722		220,259
		549,386		468,092

 

As of June 30, 2023, USD 549,386 (USD 468,092 on December 31, 2022) 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 June 30, 2023 , Merchant Clients Funds includes USD 61,632 pending to be transferred to Own Funds accounts (USD 38,119 as of December 31, 2022).

 

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15. Financial assets at fair value through profit or loss

 

Financial assets at fair value through profit or loss include the following:

 

		June 30, 2023		December 31, 2022
Bonds issued by the Treasury Department of Argentina (TV24)		51,558		—
Other debt instruments		7		1,295
		51,565		1,295

 

For 2023 and 2022, financial assets at fair value through profit or loss are investments in quoted debt securities. The increase mainly corresponds to the acquisition of locally issued Argentinian federal government bonds which are U.S. Dollar linked during June 2023. These bonds are U.S. dollar linked with a coupon rate of 0.4% and a maturity date of April 2024.

For further information referred to accounting policies see Note 2.5 Financial instruments-initial recognition and subsequent measurement to the Annual Consolidated Financial Statements for the year ended December 31, 2022, and related to fair value hierarchies see Note 24: Fair value hierarchy.

During the period, the following gain were recognized in profit and loss:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair Value Movement in profit and loss		3,654		—		3,565		—
		3,654		—		3,565		—

 

 

As at June 30, 2023, the Group had an investment in quoted debt securities and bonds issued by the Treasury Department of Argentina. Of the financial assets at fair value through profit or loss balance at the end of the year, USD 51,558 are bonds issued by the Treasury department of Argentina (TV24). Apart from this, the Group does not have concentrated risk exposure to any single geography or market having similar characteristics. Concentration of risk related to these bonds did not exceed 20 per cent of gross monetary assets at any time during the period. The concentration of risk is limited due to the fact that the Group has established limits to the investments in bonds issued by the Treasury department of Argentina.

 

 

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16. Trade and other receivables

 

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

 

		June 30, 2023		December 31, 2022
Trade receivables		264,495		218,922
Loss allowance		(170)		(280)
Trade receivables net		264,325		218,642
Advances and other receivables		35,477		21,804
		299,802		240,446

 

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:

 

		2023		2022
Opening book value as at January 1		(280)		(322)
Decrease in loss allowance for trade receivables		(30)		82
Write-off		140		—
Total as at June 30		(170)		(240)
Net impairment gain on financial assets		(30)		82

 

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 June 30, 2023 and December 31, 2022 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 48 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 0.1% for the six months ended June 30, 2023 (0.3% in the six months ended June 30, 2022).

 

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17. Other Assets

 

Other assets are composed of the following:

 

Current		June 30, 2023		December 31, 2022
Money held in escrow and guarantees due to: (i)		44,516		43,814
-Stand by credit letters required by merchants		29,550		18,575
-Banks requirements		9,029		19,988
-Processors and others requirements		2,374		1,688
-Credit card requirements		3,563		3,563
Advance payments to merchants		—		12,863
Rental guarantees		116		112
Deposits in brokers(ii)		5,576		5,576
Loss allowance(ii)		(5,576)		(5,576)
Total current Other Assets		44,632		56,789

 

 

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18. Intangible Assets

 

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

 

		2023						2022
		Internally generated software		Acquired intangible assets		Total		Internally generated software		Acquired intangible assets (ii)		Total
Cost		23,752		39,335		63,087		12,387		51,722		64,109
Accumulated amortization		(7,972)		(3,672)		(11,644)		(3,179)		(1,574)		(4,753)
Opening book value as at January 1		15,780		35,663		51,443		9,208		50,148		59,356
Additions (i)		8,145		—		8,145		4,726		4,726		9,452
Amortization of the period		(3,619)		(1,049)		(4,668)		(1,967)		(1,049)		(3,016)
Total as at June 30		20,306		34,614		54,920		11,967		53,825		65,792
Cost		31,897		39,335		71,232		17,113		56,448		73,561
Accumulated amortization		(11,591)		(4,721)		(16,312)		(5,146)		(2,623)		(7,769)

 

(i) The additions of the six months ended June 30, 2023 include USD 8,145 related to capitalized salaries and wages (USD 4,916 as of June 30, 2022).

 

		As of June 30, 2023		As of December 31, 2022
Cost		71,232		63,087
Accumulated amortization		(16,312)		(11,644)
Net book amount		54,920		51,443

 

As of June 30, 2023 , and December 31, 2022 no indicator of impairment related to intangible assets existed, so the Group did not perform an impairment test.

 

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19. Trade and other payables

 

Trade and Other Payables are composed of the following:

 

		June 30, 2023		December 31, 2022
Trade Payables		573,108		395,134
Accrued Liabilities		9,040		5,801
Other Payables		15,865		6,939
Total Trade and other payables		598,013		407,874

 

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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20. Tax Liabilities

 

The tax liabilities breakdown is as follows:

 

		June 30, 2023		December 31, 2022
Income tax payable		10,549		6,047
Other tax liabilities		2,307		5,648
Income tax perception		1,302		2,792
Digital services withholding VAT		878		2,555
Other Taxes		127		301
Total Tax Liabilities		12,856		11,695

 

 

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21. Derivative financial instruments

 

Derivative financial instruments: forward agreements

 

During the six months ended June 30, 2023 and the year-ended December 31, 2022, 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 June 30, 2023		Outstanding balance as of June 30, 2023 - Derivative financial assets / (liabilities)		Outstanding notional amount in USD as of December 31, 2022		Outstanding balance as of December 31, 2022 - Derivative financial liabilities
Non-delivery forwards		Buy USD		Brazilian Reais		15,648,705		(176)		22,436,774		122
Non-delivery forwards		Sell USD (1)		Brazilian Reais		—		—		(959,141)		(15)
Non-delivery forwards		Buy USD		Argentine Peso		15,300,000		—		6,600,000		(6)
Delivery forwards		Buy USD		Chilean Peso		13,303,165		(39)		18,750,385		(250)
Delivery forwards		Buy USD		Uruguayan Peso		4,575,480		(133)		2,240,602		48
Non-delivery forwards		Buy USD		Egyptian Pound		6,718,063		(166)		12,979,395		1,002
Non-delivery forwards		Buy EUR		Moroccan Dirham		8,281,195		(107)		6,834,496		31
Non-delivery forwards		Buy USD		Nigerian naira		4,319,153		1,020		8,863,831		(15)
Non-delivery forwards		Sell USD (1)		Nigerian naira		(3,249,103)		50		—		—
Non-delivery forwards		Buy USD		Indian Rupee		4,960,151		(22)		5,920,282		2
Non-delivery forwards		Sell USD (1)		Indian Rupee		(1,475,790)		(3)		(566,948)		1
Non-delivery forwards		Buy USD		South African Rand		6,454,302		70		5,176,642		(235)
Non-delivery forwards		Sell USD (1)		South African Rand		(3,647,492)		(2)		(2,626,458)		(11)
Non-delivery forwards		Buy USD		Peruvian Sol		4,121,749		(153)		—		—
Non-delivery forwards		Sell USD (1)		Peruvian Sol		(1,251,563)		60		—		—
Non-delivery forwards		Buy USD		Vietnamese Dong		914,267		(5)		—		—
Non-delivery forwards		Buy USD		Costa Rican Colon		159,000		(32)		159,000		(12)
Total								362				662

 

 

Hedge accounting

 

During the six months ended June 30, 2023, dLocal entered into hedge operations of trade and other receivables in Brazilian Reais, Argentine Peso, Chilean Peso, Uruguayan Peso, Egyptian Pound, Moroccan Dirham, Nigerian Naira, Indian Rupee, South African Rand, and Vietnamese Dong 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. During the six months ended June 30, 2023, dLocal recognized a net gain of USD 5,617 included in the line item "Costs of services" related to the effective portion of the

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change in the spot rate of the hedged currency (which offsets a foreign exchange loss of USD 5,359 included in the same line item) and a net loss of USD 11,637 included in the line item "Finance costs" related to the implicit interest rate.

 

During the six months ended June 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 six months ended June 30, 2022, dLocal recognized a net gain of USD 4,213 included in the line item "Costs of services" related to the effective portion of the change in fair value of the hedging instruments and a net loss of USD 4,221 included in the line item "Finance costs" related to the change in fair value of the forward element of the forward contracts (a net gain of USD 6,780 and a net loss of USD 3,055, respectively, for the three months ended June 30, 2022).

 

During the year ended December 31, 2022, dLocal entered into hedge operations of trade and other receivables in Brazilian Reais, Argentine Peso, Chilean Peso, Uruguayan Peso, Egyptian Pound, Moroccan, Dirham, Nigerian Naira, Indian Rupee, South African Rand and Costa Rica Colon, subject to foreign exchange exposure using delivery and non-delivery forward contracts. The spot element of these forward transactions was 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 for hedges of Uruguayan Peso and Chilean Peso. During the year ended December 31, 2022, dLocal recognized a net gain of USD 14,559 included in the line item "Costs of services" related to the effective portion of the change in the spot rate of the hedged currency (which offsets a foreign exchange loss of USD 14,832 included in the same line item) and a net loss of USD 18,763 included in the line item "Finance costs" related to the implicit interest rate.

 

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22. 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:

 

		2023		2022
Carrying amount as at January 1		1,473		1,710
Reversal to labor provision		(571)		(200)
Interest charges for labor provision		14		63
Carrying amount as at June 30		916		1,573

 

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23. Related parties

 

(a) Key Management compensation

 

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

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Short-term employee benefits – Salaries and wages		979		999		520		563
Long-term employee benefits – Share-based payment		1,447		1,527		771		683
		2,426		2,526		1,291		1,246

 

(b) Transactions with other related parties

 

The following transactions occurred with related parties:

 

		Six months ended				Three months ended
		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Transactions with merchants – Revenues		1,043		8		808		(303)
Transactions with preferred suppliers (Collection agents) – Costs		(10)		(173)		(2)		78

 

(c) 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:

 

		June 30, 2023		December 31, 2022
Transactions with merchants – trade receivables		758		428
Transactions with merchants – trade payables		(64)		(482)
Transactions with preferred suppliers (Collection agents) – trade payables		—		(1,258)
Transactions with preferred suppliers (Collection agents) – trade receivables		583		552

 

Outstanding balances are unsecured and are repayable in cash.

 

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24. Fair value hierarchy

 

The following tables show financial instruments recognized at fair value for the period ended June 30, 2023 and December 31, 2022, 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.

 

June 30, 2023		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Assets
Financial Assets at Fair Value through Profit or Loss		51,565		—		51,565		51,565		—		—
Other Assets		—		44,632		44,632		—		—		—
Trade and Other Receivables		—		299,802		299,802		—		—		—
Derivative financial instruments		1,200		—		1,200		—		1,200		—
Cash and Cash Equivalents		—		549,386		549,386		—		—		—
		52,765		893,820		946,585		51,565		1,200		—

 

December 31, 2022		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Assets
Financial Assets at Fair Value through Profit or Loss		1,295		—		1,295		1,295		—		—
Other Assets		—		56,789		56,789		—		—		—
Trade and Other Receivables		—		240,446		240,446		—		—		—
Derivative financial instruments (1)		1,206		—		1,206		—		1,206		—
Cash and Cash Equivalents		—		468,092		468,092		—		—		—
		2,501		765,327		767,828		1,295		1,206		—

 

June 30, 2023		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Liabilities
Trade and Other Payables		—		(598,013)		(598,013)		—		—		—
Lease liabilities		—		(3,967)		(3,967)		—		—		—
Derivative financial instruments		(838)		—		(838)		—		(838)		—
		(838)		(601,980)		(602,818)		—		(838)		—

 

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December 31, 2022		FVPL		Amortized cost		Total		Level 1		Level 2		Level 3
Liabilities
Trade and Other Payables		—		(407,874)		(407,874)		—		—		—
Lease liabilities		—		(4,079)		(4,079)		—		—		—
Derivative financial instruments		(544)		—		(544)		—		(544)		—
		(544)		(411,953)		(412,497)		—		(544)		—

 

 

There were no changes in level 3 items for the periods ended June 30, 2023 and December 31, 2022. 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

 

As mentioned in note 1.2, on July 31, 2023, the Company made a second purchase of bonds issued by the Treasury department of Argentina through a public bidding process, for a total amount of 49,564. These bonds are U.S. linked with a coupon rate of 0.4% and a maturity date of April 2024.

 

 

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Exhibit 99.3

 

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Exhibit 99.4

 

 

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