What happened
DLocal (DLO 0.56%) stock is posting explosive gains in this week's trading thanks to strong quarterly results. The fintech specialist's share price was up 51.6% from the previous week's market close before the market opened on Friday, according to data from S&P Global Market Intelligence.
DLocal published its second-quarter results after the market closed on Aug. 15, delivering sales and earnings for the period that came in above Wall Street's expectations. The Uruguay-based company posted earnings of $0.15 per share on revenue of roughly $161.14 million, beating the average analyst estimate's call for per-share earnings of $0.13 on sales of $149.39 million.
So what
DLocal managed to grow revenue roughly 59% year over year in the second quarter, and the business continued to post strong net revenue retention. The payment-technologies specialist recorded a net revenue retention rate of 148% in the quarter, which means that existing customers increased their spending an average of 48% compared to the prior-year period. Total payment volume conducted across its platform also skyrocketed 80% year over year to hit $4.4 billion.
DLocal also announced that Pedro Arnt would be joining the company as co-CEO, serving alongside Sebastián Kanovich in the role. Arnt previously served as chief financial officer of MercadoLibre for 12 years, helping the company to deliver stellar growth across his tenure.
At the very least, DLocal has landed a capable new executive. Investors may also be speculating that Arnt coming on board as co-CEO signals that MercadoLibre may be gearing up to acquire the company.
Now what
DLO PE Ratio (Forward) data by YCharts
Following the recent rally, DLocal is valued at approximately 34 times this year's expected earnings and roughly 8.9 times expected sales. While the company has a growth-dependent valuation, the business is posting strong margins and expanding revenue at a rapid pace.
With its Q2 report, DLocal reaffirmed its full-year guidance for sales between $620 million and $640 million and non-GAAP (adjusted) earnings before interest, taxes, deprecation, and amortization (EBITDA) between $200 million and $220 million. Based on the midpoints of its current guidance ranges, the company is calling for revenue to increase roughly 50% and adjusted EBITDA to climb roughly 37% year over year.
