The first unicorn Uruguay, dLocal, He is exploring various options to try to finish recovering after the scandals he has gone through in the last year, trapped between multiple accusations of fraud from major financial companies and even the Argentine government. is the sale one of the possible alternatives?
Since the end of 2022, luck does not seem to be on the side of dLocal which, despite having significant economic and growth results at the business level, has seen its positive data overshadowed by different scandals that even brought its shares to historical lows on several occasions. The first of these was the report of Muddy Waters Capitals, accusing the fintech payment processor to falsify its account books and be a “fraud”, an event that triggered several complaints and investigations about the company; the most recent, the denunciation of the government of Argentina against him for capital flight and money laundering in the neighboring country.
In the meantime, the dLocal board of directors has carried out different actions with the aim of mitigating the negative impact of the complaints against it, among them, the share repurchase for 100 million dollars, the application for a regulatory license in United Kingdom, the designation of one of its founders —Sergio Fogel— as co-chairman of the company and a investment of 100 million dollars in Argentina.
Now the uruguayan fintech that trades in nasdaq since 2021 and provides electronic payment services to 40 countries of emerging economies in the world, analyzes different options to continue on its way, according to Bloomberg. Among them, one is also being considered potential sale.
According to close sources consulted by the US agency, the technology company has been speaking with potential buyers and received signals of interest from different investors. However, there is still no final decision made on dLocal, which for the moment remains independent and could continue to be so.
a year to forget
Since November 2022, dLocal seems to have luck that goes against its economic results, inaugurated with the lapidary report by the financial company Muddy Waters Capital, which accused the company of being a “fraud” and started a waterfall of complaints and investigations against themincluding a class action lawsuit filed in the United States Supreme Court. The impact was evident in the Actions of the Uruguayan unicorn, that that black Wednesday of November fell more than 51% until touching a historical minimum; as well as in the utilities reflected in the financial report for the fourth quarter of 2022, which fell by 18% despite the exceptional results achieved in the same period.
The most recent episode was the conflict with Argentina, which charged the company with alleged movements of money laundering and foreign currency flight for 400 million dollars in the neighboring country through the overbilling of digital services; and filed the corresponding complaint with the Securities and Exchange Commission (SEC)the regulator Wall St. The news had a negative impact on the actions of the unicorn, which not only came out to deny the accusations —although it assured its full collaboration with the Argentine Justice during the investigations— but also appointed its co-founder, Sergio Fogel, as co-chairman, and then announced investments for 100 million dollars in the Argentine market to demonstrate its “economic substance”.
A record first quarter in revenue
Despite the negative correlate at the stock level, dLocal had an exceptional first quarter in terms of its operating results, with profits reaching $35.5 million, a 83% more than the previous quartervery marked by the accusations and the distrust of the shareholders.
“Our results for the first quarter of 2023 demonstrate, once again, our ability to consistently deliver strong dollar growth across all key metrics,” said its CEO, Sebastian Kanovich.
On the other hand, the report indicates that the Gross profit between January and March of this year reached $61.8 milliona 42% YoY increase.
The skyrocketing profits in the first months of the year —the results for the second quarter and the half-year balance are not yet known— were strongly influenced by the huge increase in revenue for the company, which added $137.3 million, what it meant a year-over-year increase of 57%, compared to $87.5 million for the same period in 2022.
Part of this impulse responds to the considerable expansion that the company carried out in Africa, particularly in Nigeria. There, the company generated revenues of $26.9 million, the highest among countries.
On the other hand, the company highlighted the evolution of the total payment volume (TPV)which reached a record $3.6 billion in the first quarter, a 70% more compared to the same period last year and 8% more based on the last three months of 2022.
In addition, the report indicated that in the last period, dLocal destination $36.9 million in share buyback program; and that increased its workforce by 36% year after year until it reached 763 employees. “We have consistently maintained a EBITDA adjusted on gross profit greater than 70% in the last nine quarters,” added Kanovich.
Source: Ambito
