dLocal Ltd (NASDAQ: DLO)

Sector: Technology Industry: Software - Infrastructure CIK: 0001846832
Market Cap 4.08 Bn
P/B 8.09
P/E 23.88
P/S 4.25
ROIC (Qtr) 31.27
Div Yield % 3.63
Rev 1y % (Qtr) 52.06
Total Debt (Qtr) 66.79 Mn
Debt/Equity (Qtr) 0.13

About

dLocal Ltd, a company known by its ticker symbol DLO, operates in the financial technology industry, focusing on payment processing and foreign exchange services for businesses and consumers across the globe. The company's main business activities include facilitating cross-border transactions, enabling merchants to accept payments from customers in various countries, and providing foreign exchange services to individuals and businesses. In essence, dLocal's primary role is to simplify the process of cross-border transactions, making it easier...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 167.20M provides robust 2.50x coverage of total debt 66.79M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 604.47M provide 9.41x coverage of short-term debt 64.23M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 167.20M provides exceptional 8799.84x coverage of minority interest expenses 19000, showing strong core operations.
  • Strong tangible asset base of 1.34B provides 20.02x coverage of total debt 66.79M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 165.09M exceeds capital expenditure of 2.11M by 78.35x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 167.20M barely covers its investment activities of (10.69M), with a coverage ratio of -15.64, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (10.69M) provide weak support for R&D spending of 29.81M, which is -0.36x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Tax assets of 5.43M provide limited offset against tax liabilities of 18.57M, which is 0.29x, indicating potential future cash flow pressure from tax obligations.
  • Other current assets of 17.33M provide weak coverage of payables of 816.73M, which is 0.02x, suggesting potential working capital stress in near term.
  • Fixed assets of 7.33M showing 0.32x ratio to depreciation of 22.72M indicates aging infrastructure requiring significant near-term capital investment.

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.60 2.69
EV to Cash from Ops. EV/CFO 21.93 28.91
EV to Debt EV to Debt 54.90 19.83
EV to EBIT EV/EBIT 15.14 -9.95
EV to EBITDA EV/EBITDA 16.50 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 22.21 26.09
EV to Market Cap EV to Market Cap 0.90 0.36
EV to Revenue EV/Rev 3.82 -9.34
Price to Book Value [P/B] P/B 8.09 3.88
Price to Earnings [P/E] P/E 23.88 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 87.50 2.71
Dividend per Basic Share Div per Share (Qtr) 0.53 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 93.42 1.68
Interest Coverage Int. cover (Qtr) 6.49 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -67.62 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 7.84 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 3.36 25.27
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 42.75 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 1.04 20.13
EBT Growth (1y) % EBT 1y % (Qtr) 40.15 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 46.34 67.50
FCF Growth (1y) % FCF 1y % (Qtr) -6.74 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 32.06 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.68 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.67 1.22
Current Ratio Curr Ratio (Qtr) 1.46 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.13 -0.96
Interest Cover Ratio Int Coverage (Qtr) 6.49 -14.20
Times Interest Earned Times Interest Earned (Qtr) 6.49 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 27.60 -548.16
EBIT Margin % EBIT Margin % (Qtr) 25.22 -199.84
EBT Margin % EBT Margin % (Qtr) 21.34 -607.20
Gross Margin % Gross Margin % (Qtr) 38.60 51.88
Net Profit Margin % Net Margin % (Qtr) 17.80 -610.00