DLocal (DLO -2.33%) is a fast-growing fintech based in South America. The company is a cross-border payments company, one that makes it easy for companies like Amazon, Shopify, Microsoft, Uber, and Spotify to make and receive payments in emerging markets around the world.

The company has over 400 merchants in its network, and its ecosystem has grown to 35 countries in South America, Asia, and Africa. Right now, the vast majority of its revenues (92%) come from its base of 15 countries in Latin America, namely Argentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Panama, Paraguay, Peru, and Uruguay (its home country).

Person uses credit card to make an online purchase.

Image source: Getty Images.

After its IPO last year, the shares surged to a $20 billion valuation. And then the stock crashed along with a lot of other internet highfliers. Now, DLocal's market cap has been cut in half, and the stock is about where it was on the day of the IPO.

DLO Chart

DLO data by YCharts

But this stock won't likely stay down for long. DLocal has had triple-digit revenue growth, and it's also highly profitable with a 32% margin. Plus, it's got the highest net revenue retention rate I've ever seen in my life: 219%. Here's why I'm bullish on this international payments company.

Improving global internet commerce

A lot of people around the world do not have an "international" credit card, like Visa or Mastercard. In fact, there are over 700 different payment methods in the emerging markets where DLocal operates. So it can be incredibly complex for internet companies to make and receive payments in emerging markets. DLocal simplifies this process: with just one app, you can add as many countries and payment systems as you want.

That's why the company is seeing such amazing growth from its existing client base. The company tracks its merchant engagement. Every year, its average customer adds another country to its roster. In 2021, its average customer added an additional 23 payment methods via the app. 

Year Average Number of Countries per Merchant Average Number of Payment Methods per Merchant
2018 4 29
2019 5 35
2020 6 44
2021 7 67

Data source: Dlocal.

DLocal saw $6 billion in payments made through its app last year. That's up 193% from 2020. And this is just a drop in the bucket. DLocal is chasing a $1.2 trillion opportunity in payments in its emerging markets.

Consider that most large-cap stocks are seeking growth opportunities abroad. If you own Amazon or Shopify or Microsoft, you might also want to own shares of the company that's helping all of them receive and make payments in emerging markets.

The stock is expensive

DLocal is priced for success, with its stock selling for 131 times earnings and 41 times sales. Over the last year, we've seen multiples in the stock market get squeezed, and DLocal has not been immune. But those high multiples also indicate how optimistic the market is about this company.

DLocal's market opportunity is vast. It's already landed many high-profile internet companies as customers. And its ability to "land and expand" its relationships with those customers is extraordinary. DLocal is in the sweet spot, providing payments options overseas as companies like Amazon, Microsoft, Shopify, and other internet megacaps seek sales opportunities abroad. That's why I think this $10 billion fintech is going to be one of the big winners over the next decade.