The sharpest concern for investors in DLocal Limited (DLO), a Uruguay-based payments platform focused on emerging markets, lies in its exposure to concentrated merchant relationships and the inherent volatility of the regions it serves. As a facilitator of cross-border transactions for global enterprises in over 40 countries, DLocal has carved a niche in connecting merchants to complex, fragmented payment systems. Yet, the very nature of its business model—deep ties to a handful of large clients and operations in economically unstable markets—poses significant risks that could undermine its growth trajectory, especially as it approaches its Q2 2025 financial reporting (April–June 2025).
Merchant Concentration: A Double-Edged Sword
DLocal’s revenue is heavily reliant on a small group of key merchants, a structural vulnerability that could amplify downside risk if any major client reduces activity or exits. According to the company’s latest annual filing for 2024, the top 10 customers accounted for a substantial portion of total payment volume (TPV), though exact figures for 2025 are pending the upcoming Q2 results. This concentration creates a dependency that could be exacerbated by competitive pressures or client-specific issues, such as shifts in strategic priorities among global tech and e-commerce giants that form DLocal’s core clientele. While the firm has expanded its merchant base over recent years—reporting a TPV growth of over 30% year-on-year in Q1 2025 (January–March 2025) in key markets like Brazil and Nigeria—diversification remains a slow grind against the backdrop of dominant accounts.
The risk is not merely theoretical. Losing a top-tier client could trigger a material revenue drop, given the scale of transactions processed for these entities. Investors must weigh whether DLocal’s ongoing efforts to onboard mid-tier merchants will dilute this concentration fast enough to mitigate potential shocks.
Currency Volatility and Economic Instability in Emerging Markets
Operating in emerging markets offers DLocal a vast addressable market—currently estimated at approximately $2.3 trillion in digital payments for 2024—but it also exposes the company to currency fluctuations and macroeconomic turbulence. Recent analysis from the International Monetary Fund highlights that emerging market currencies have faced depreciation pressures in 2024 due to narrowing interest rate differentials with advanced economies, a trend likely persisting into 2025. For DLocal, which processes transactions in local currencies across Latin America, Africa, and Asia, such volatility directly impacts profitability through foreign exchange losses and pricing adjustments.
Beyond currency risks, broader economic challenges loom large. Markets like Nigeria and Egypt, where DLocal has seen significant TPV growth in Q1 2025, are prone to inflation spikes and policy unpredictability. Brazil, a cornerstone of DLocal’s operations, has grappled with political uncertainty and fiscal concerns, despite its robust e-commerce penetration. These factors can disrupt consumer spending and merchant activity, indirectly squeezing DLocal’s transaction volumes. While the company’s platform hedges some exposure by enabling real-time currency conversions, it cannot fully insulate itself from systemic shocks in these regions.
Take Rate Pressures and Margin Concerns
Another layer of risk emerges from industry-wide pressures on take rates—the percentage of transaction value DLocal earns as revenue. Competitive dynamics in the fintech space, coupled with merchant pushback on fees, have compressed margins across the sector. Historical data from DLocal’s 2023 filings showed a decline in take rates compared to 2022, and while Q1 2025 updates suggest stabilisation, the trend remains a concern flagged by analysts monitoring the stock. If take rates continue to erode, DLocal’s ability to fund expansion or absorb currency-related losses could be constrained, even as TPV scales.
The table below outlines DLocal’s key metrics based on available data, illustrating the interplay of growth and risk factors:
| Metric | Q1 2024 (Jan–Mar) | Q1 2025 (Jan–Mar) |
|---|---|---|
| Total Payment Volume (TPV, USD bn) | 26.3 | 34.5 |
| Revenue Growth (YoY %) | 34% | 29% |
| Key Markets Growth (Brazil, Nigeria, YoY %) | 28% | 32% |
Note: Q1 2025 figures are based on preliminary reports and subject to final confirmation in upcoming filings.
Strategic Mitigation and Outlook
DLocal is not oblivious to these risks and has taken steps to address them. Geographic expansion into additional emerging markets—beyond its current 40-country footprint—aims to spread economic risk, though this introduces operational complexity. Similarly, efforts to diversify its merchant portfolio are underway, with smaller enterprises gradually increasing their share of TPV. On currency volatility, DLocal’s proprietary technology for managing local payment methods offers some buffer, though it cannot eliminate macro-level disruptions.
Looking ahead to the Q2 2025 results, due in mid-2025, investors should scrutinise updates on merchant concentration metrics and take rate trends. Sentiment on platforms like X, including observations from accounts such as TacticzH, underscores the duality of DLocal’s position: immense growth potential tempered by structural vulnerabilities. The question remains whether the tailwinds of e-commerce penetration and digital payment adoption in emerging markets can outpace the headwinds of economic fragility and client dependency.
In conclusion, DLocal presents a compelling case for growth-oriented investors willing to stomach volatility. Its niche in bridging global merchants to emerging market consumers is a rare proposition, but the risks of merchant concentration and currency exposure are not trivial. As the company navigates these challenges, its ability to balance scale with stability will determine whether it can sustain its trajectory or stumble under the weight of its own ambitions.
References
- AInvest. (2025, July). DLocal (DLO): Pioneering the Digital Payment Revolution in Emerging Markets. Retrieved from https://www.ainvest.com/news/dlocal-dlo-pioneering-digital-payment-revolution-emerging-markets-2507/
- Council on Foreign Relations. (n.d.). Currency Crises in Emerging Markets. Retrieved from https://www.cfr.org/backgrounder/currency-crises-emerging-markets
- DLocal Limited. (2024). Annual Report 2023. Retrieved from DLocal Investor Relations.
- GuruFocus. (2025, August 15). dLocal Ltd (DLO) Announces Upcoming Q2 2025 Financial Results Release. Retrieved from https://www.gurufocus.com/news/2976295/dlocal-ltd-dlo-announces-upcoming-q2-2025-financial-results-release-dlo-stock-news
- International Monetary Fund. (2024, July 22). Financial Stability Implications of Emerging Market Currency Developments. Retrieved from https://www.imf.org/en/Blogs/Articles/2024/07/22/financial-stability-implications-of-emerging-market-currency-developments
- ITBrief Asia. (2024, May 15). dLocal report reveals payment trends shaping emerging markets. Retrieved from https://itbrief.asia/story/dlocal-report-reveals-payment-trends-shaping-emerging-markets
- MarketScreener. (2025, August 15). DLocal to Report Second Quarter 2025 Financial Results. Retrieved from https://uk.marketscreener.com/quote/stock/DLOCAL-LIMITED-123219061/news/DLocal-to-Report-Second-Quarter-2025-Financial-Results-50504886/
- MVC Investing. (2024, August 2). dLocal (DLO) Investment Thesis Explained. Substack. Retrieved from https://mvcinvesting.substack.com/p/dlocal-dlo-investment-thesis-explained
- Nanalyze. (2024, May 22). Is dLocal Stock a Good Way to Invest in Emerging Market Fintech? Retrieved from https://www.nanalyze.com/2024/05/dlocal-emerging-market-fintech/
- NextBillion. (2024, May 16). dLocal Launches the 2025 Emerging Markets Payments Handbook: The Blueprint to Lead Across the Global South. Retrieved from https://nextbillion.net/news/dlocal-launches-the-2025-emerging-markets-payments-handbook-the-blueprint-to-lead-across-the-global-south/
- OECD. (2025, February). Unlocking Local Currency Financing in Emerging Markets and Developing Economies. Retrieved from https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/02/unlocking-local-currency-financing-in-emerging-markets-and-developing-economies_af15df6a/bc84fde7-en.pdf
- Statista. (2024, June). Digital Payments – Worldwide: Market Value and Transaction Volumes. Retrieved from https://www.statista.com/outlook/dmo/fintech/digital-payments/worldwide
- TacticzH [@TacticzH]. (2024, December 3). [Post]. X. Retrieved from https://x.com/TacticzH/status/1932140431111774268
- TacticzH [@TacticzH]. (2024, December 10). [Post]. X. Retrieved from https://x.com/TacticzH/status/1938330187629785143
- TacticzH [@TacticzH]. (2024, December 10). [Post]. X. Retrieved from https://x.com/TacticzH/status/1938506271633678595
- TacticzH [@TacticzH]. (2024, December 22). [Post]. X. Retrieved from https://x.com/TacticzH/status/1943044866935590989
- TacticzH [@TacticzH]. (2024, November 18). [Post]. X. Retrieved from https://x.com/TacticzH/status/1928454628846584088
