dLocal closed 2025 with total payment volume reaching $41 billion, a 60 percent year-over-year acceleration that extends a striking streak of five consecutive quarters above 50 percent growth. The company crossed the $1 billion revenue threshold for the first time while expanding adjusted EBITDA as a percentage of gross profit by five percentage points to 69 percent, demonstrating that the operating leverage inherent in its platform model is not theoretical but actively compounding. Net income rose 63 percent to $197 million and adjusted free cash flow more than doubled to $191 million at a 97 percent conversion ratio, enabling a new $300 million share repurchase program alongside a $57 million dividend.
The investment thesis rests on three variables. First, the market structure variable: the emerging markets digital payments total addressable market is estimated at $2.1 trillion in 2025 and expected to double by 2030, yet dLocal holds less than 2 percent share. The primary metric is TPV growth sustained above 50 percent, and the market signal is the accelerating quarterly trajectory through the second half of 2025. Second, the moat deepening variable: the company's regulatory license portfolio (37 licenses across 26 markets with 16 applications pending), the growing share of wallet among existing merchants (now approximately 10 percent, up three percentage points), and the network effects of serving top merchants across an average of 12 countries and 50 payment methods create compounding barriers to displacement. The primary metric is net revenue retention sustained above 140 percent, and the market signal is the 158 percent TPV retention rate. Third, the capital allocation variable: with net cash of $338 million, zero leverage, 35 percent return on equity, and a newly authorized buyback complementing the 30 percent FCF dividend policy, the company has the financial flexibility to fund organic innovation, tuck-in acquisitions, and shareholder returns simultaneously. The primary metric is adjusted free cash flow conversion, and the market signal is the 97 percent ratio achieved in 2025.
The binary market implications are clear. Confirmation arrives if TPV growth remains above 50 percent through 2026 while adjusted EBITDA to gross profit holds at or above 65 percent, which would validate the thesis that scale drives margin expansion rather than dilution. The thesis breaks if TPV growth decelerates below 40 percent or if gross profit per employee declines meaningfully, which would signal that the platform's operating leverage has exhausted itself or that competitive intensity in key markets such as Brazil and Mexico is compressing unit economics faster than mix shift can offset.