UPDATE 2 – Uruguay’s dLocal sees profitability increase in 2023 after rocky fourth quarter
(Reworking with growth forecasts, adding context)
By Kylie Madry and Isabel Woodford
April 4 (Reuters) –
Uruguayan payments company dLocal Ltd said on Tuesday it expects core revenue in 2023 to grow up to 44% compared with last year, after seeing fourth-quarter net profit fall amid potential fraud allegations.
The company, which handles payments across most of Latin America as well as parts of Africa and Asia, also forecast first-quarter revenue of between $135 million and $138 million, an increase of up to 58% from the year-ago quarter.
Dlocal’s fourth-quarter profit of $19.4 million was down 18% from a year earlier as the company saw higher operating costs, including locked-in deposits in bankrupt cryptocurrency exchange FTX and $2 million in costs related to a card seller report.
Short seller Muddy Waters had accused dLocal of potential fraud in the quarter, which dLocal has denied.
The board said in December that the key claims made by the short seller were “without merit” after an internal review, without elaborating.
The company has yet to provide a detailed written response to Muddy Waters’ allegations, which included claims that dLocal accessed client funds, had falsified reporting of its total payment volume and was “likely a fraud.”
Dlocal did not immediately respond to a Reuters request for comment on Tuesday.
For the quarter ended Dec. 31, total payment volumes rose 78% annually to a record $3.3 billion, dLocal said in a statement, while revenue rose 55% to $118.4 million, slightly below the Refinitiv estimate of $119 .48 million dollars.
Adjusted quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter rose 39% to $40 million, reaching $153.05 million for the full year.
Dlocal predicted that adjusted EBITDA will increase in 2023 to between $200 million and $220 million.
Nasdaq shares of dLocal have recouped some of their losses since the Muddy Waters report was released, though they were still down about 30% at the end of March from Nov. 15.
Top shareholders General Atlantic, Tiger and Fidelity all boosted their stakes in the company in the quarter, according to SEC filings.
CEO Sebastian Kanovich said in the release that the purchases demonstrated shareholders’ “confidence in and excitement about the future of dLocal.” (Reporting by Kylie Madry and Isabel Woodford; Editing by Sarah Morland and Nivedita Bhattacharjee)
