Uruguay’s first unicorn DLocal Ltd. (Nasdaq: DLO) is accelerating its expansion plans now that it’s more than tripled its cash reserves. The payment services firm’s CEO Sebastian Kanovich told Bloomberg that they’re looking to expand into Africa and Asia through possible acquisitions.
“We continue to explore the M&A market on a weekly basis,” Kanovich said. “We have enough cash on balance and also enough access to capital to fund these acquisitions.”
Established in 2016, DLocal provides cross-border payments connecting global merchants to emerging markets. Some of DLocal’s customers include Amazon, Microsoft, and Spotify. The company, which has offices in Montevideo, São Paulo, San Francisco, London, Tel Aviv, and Shenzhen, began trading on the Nasdaq Exchange last year.
Last year, the company saw its valuation soar, raising $150 million at a $5 billion valuation less than seven months after securing $200 million at a $1.2 billion valuation. As of March 31, the company had $410 million in cash, compared with $336 million as of Dec. 31 and nearly $128 million as of March 31, 2021. DLocal is putting this money to work.
This wouldn’t be the company’s foray into M&A activity. Last year, DLocal acquired payment services provider PrimeiroPay for $40 million.
DLocal’s chief operating officer Sumita Pandit added that potential acquisition deals are getting cheaper as tech stocks have plummeted, and the drop has spilled over into the private equity space.
“These won’t be billion-dollar deals. We are going to be very disciplined about what we acquire,” said Pandit.
DLocal reported strong quarterly earnings last month that beat analysts’ expectations. Revenue for the company reached $87.5 million in Q1, compared with $40.3 million in the same quarter last year. Per MarketWatch, analysts polled by FactSet were expecting revenue of $82.8 million.
Earnings for the quarter came in at $26.3 million compared with last year’s $16.9 million, or 6 cents a share. Analysts were expecting earnings of $24.5 million.
DLocal said first quarter total payment volume reached $2.1 billion, more than doubling compared with $926 million in the first quarter of 2021.
DLocal is one of the holdings in EMQQ Global’s Next Frontier Internet & Ecommerce ETF (FMQQ ), which currently allocates about 1.43% of its holdings to the Uruguayan fintech firm.
FMQQ seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the Next Frontier Internet and Ecommerce Index (FMQQetf.com). Securities must meet a minimum of a $300 million market cap and pass a liquidity screen that requires a $1 million average daily turnover.
When the fund was launched in September, Kevin T. Carter, founder and CIO of EMQQ Global, said that the goal of FMQQ was to “be an attractive alternative for investors who want to capture the budding opportunities in these ‘next frontier’ markets and/or complement their Chinese tech allocations and balance out their current portfolio weightings.”
The fund has an expense ratio of 0.86%.
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