Episode notes
Daniel Mahncke and Shawn O’Malley take a deep dive into DLocal (NASDAQ: DLO), the first Uruguayan unicorn and the emerging markets payment provider for companies like Amazon, Uber, Spotify, Netflix, and many more. DLocal is trading at attractive multiples while growing payment volumes at over 70% and printing cash due to high operating leverage and a high-margin business model. That cash is given back to shareholders in the form of dividends and buybacks.
Daniel and Shawn discuss whether the high customer concentration and the declining take rate justify the cheap valuation or whether the market is not understanding the full potential of this emerging market jewel. In the end, Daniel values the business and decides whether DLO deserves a spot in The Intrinsic Value Portfolio.
IN THIS EPISODE YOU’LL LEARN:
(00:00:00) Intro
(00:03:01) How DLO became the leading player in emerging markets
(00:07:14) What makes DLO’s business model stand out
(00:19:08) What two megatrends DLO benefits from
(00:28:18) Whether there is a race to the bottom with take rates
(00:56:10) How DLO compares to Western competition
(01:00:30) How DLocal distributes cash to shareholders
(01:19:00) Valuation discussion of DLO
(01:21:41) Whether DLO is valued attractively
(01:23:19) Whether Shawn and Daniel add DLO to the Intrinsic Value Portfolio
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
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- Portfolio Review Submit Tool.
- Value Investors Club Pitch on DLO.
- Interview with the CEO, Pedro Arnt.
- DLocal Investor Relations Podcast.
- Founder and CEO Interview by Stratechery.
- Check out our previous Intrinsic Value breakdowns: Visa, Amazon, Sea Limited, Mercado Libre, Shopify.
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