What happened
Shares of Uruguayan payments company DLocal (DLO -0.76%) traded 14% lower as of 10:13 a.m. ET today after the company reported earnings results for the second quarter of the year.
So what
DLocal reported diluted earnings per share of $0.10 on total revenue of $101.2 million, both numbers that slightly beat analyst estimates for the quarter.
Total payment volume across DLocal's platform in Q2 hit roughly $2.4 billion in the quarter, which is up 67% year over year and up 16% from the first quarter of 2022.
"We remain focused on building the best financial infrastructure for our merchants across multiple emerging markets," DLocal CEO Sebastian Kanovich said in a statement.
He added: "Our expansion efforts outside Latin America continue to yield results, as revenues in Africa and Asia increased triple digit [sic] by 155% year-over-year, representing 13% of our total revenues in this quarter. We continue to cross-sell to merchants that originally started their relationship with us in Latin America, having now 9 out of our Top 10 merchants (in terms of TPV) processing payments with us in Africa and Asia, with significant opportunities to continue scaling."
Now what
DLocal didn't exactly have a bad quarter, but the company's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin came in at 38%, which is the same as it was in the first quarter of the year and down year over year.
The company also trades at a high valuation of close to 95 times earnings and more than 28 times revenue. DLocal seems to be making progress, but it looks like the valuation has simply gotten ahead of itself here, especially in these market conditions.
