DLocal Limited (NASDAQ: DLO) shares experienced a sharp 7.27% decline in after-hours trading on Wednesday, following the release of its third-quarter financial results. The fintech company, which specializes in cross-border payments in emerging markets, reported earnings that surpassed analyst expectations but failed to impress investors.
For the third quarter, DLocal reported earnings per share of $0.17, beating the consensus estimate of $0.16 and marking an 88.89% increase from the same period last year. Revenue also exceeded expectations, coming in at $282.483 million, a 52.06% year-over-year growth and above the anticipated $262.006 million. The company's adjusted EBITDA reached $71.7 million, with a margin of 25%.
Despite the strong top and bottom-line performance, investors appeared concerned about potential headwinds. The company reported a gross margin of 37%, which may have raised questions about profitability amid rapid growth. Additionally, DLocal faced a short-term hit of $13.1 million from Argentina flow restructuring, impacting its quarter-over-quarter net profit. While the company expects to reverse this in coming quarters, it may have contributed to investor unease. The after-hours sell-off suggests that market participants might be reassessing DLocal's valuation or expressing caution about its future growth trajectory in the competitive fintech landscape.
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