What happened
Shares of the Uruguayan payments company dLocal (DLO -2.48%) were trading roughly 15% lower at 10:15 a.m. ET today after the company reported earnings results for the fourth quarter of the year.
So what
In the fourth quarter, dLocal reported diluted earnings per share of $0.06 on total revenue of $118 million, both numbers that missed analyst estimates for the quarter.
dLocal also had $3.3 billion of total payment volume in the fourth quarter, which is up 78% year over year. However, the company's profit margin of 16% in the quarter is down from 31% in the fourth quarter of last year.
"We grew our merchant base from 300+ in 2020 to over 600 in 2022, with a robust sales pipeline ahead as we enter 2023. We continued to expand our footprint in emerging markets, launching operations in five new countries during 2022," dLocal's CEO Sebastian Kanovich said in an earnings statement.
dLocal is also guiding for revenue of $640 million at the high end of its range, which would imply 53% upside from revenue generated in 2022. Furthermore, dLocal is guiding for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $220 million at the high end of its range, which implies 44% upside from 2022 levels.
Now what
Investors may be selling the stock today because of the earnings miss, lower margins, or the guidance not being as strong as they had hoped. The company still trades at 22 times forward earnings, so that might simply be a tough valuation to hold under current market conditions.
But ultimately, I think dLocal's guidance for the year looked strong, and the company continues to grow nicely, so I am not overly concerned about the sell-off.
