DLocal Limited (DLO) Earnings Call Transcript & Summary

Thank you, operator. We're glad to have everyone with us for this inaugural quarterly earnings conference call following our IPO. I'd like to remind you that this event is being webcast live and can also be reached through DLocal's website at investor.dlocal.com, where you'll find the presentation as well. A replay will become available soon after the event ends. Before we go further, please note that any forward statements contained in the presentation or said during this conference call rest on information currently available and DLocal's present assumptions, expectations, and projections regarding future events. Although the company holds the view that its assumptions, expectations, and projections are reasonable given the information currently available, we advise you against placing undue reliance on these forward-looking statements. Actual results could differ materially from those contained in DLocal's presentation or talked about on this conference call for numerous reasons, including those outlined in the forward-looking statements and Risk Factors sections of DLocal's registration statement on Form F-1 and other filings with the Securities and Exchange Commission, all of which can be found on DLocal's Investor Relations website. At this point, I'll hand the conference over to Sebastián Kanovich, our Chief Executive Officer. Seba, please go ahead with your presentation.

Hello everyone, and thanks for joining us to discuss what we delivered in the second quarter. Joining me are our Chief Operating Officer, Sumita Pandit, and our Chief Financial Officer, Diego Cabrera Canay. Since listing on June 3, 2021, this is the first time we're holding an earnings call, and we're glad to walk you through how things are going, and we're grateful that you're paying attention to us. We'll begin right away with Slide 3. We realize a number of you are tuning in to hear about us for the very first time. We'll start with a refresher on our identity, the issues we address for merchants, and our view of the total market we can serve. Then we'll move to an update on the areas where we see future growth, and after that, we'll walk through our financial results. At the close, we'll leave time for questions and answers. So, who are we? Through DLocal, merchants operating globally can link up smoothly with billions of shoppers across emerging markets. With our platform, One dLocal, those merchants get one API, one integration, and one contract. Our focus is purely B2B, and we're glad that several of the world's biggest merchants count as our clients — names like Microsoft, Rappi, Kuaishou, Mailchimp, Wikimedia, InDriver, and Wix. Right now, our infrastructure supports merchants in 30 emerging markets spanning Latin America, Africa, and Asia. Turning to the results: Q2 was the strongest quarter in our history. Compared with the second quarter of 2020, total process volume, or TPV, rose 319% year-over-year, hitting US$1.5 billion for the quarter. This quarter's TPV marks a company milestone, since it's the first time we've gone above US$1 billion within a single quarter. You might recall that during the first quarter of 2021, our TPV increased 139% year-over-year. So our growth keeps accelerating, both on a year-over-year basis and quarter-over-quarter. In Q2 2021, our top line rose to $59 million — that's 186% higher than what we posted in Q2 2020. Cost discipline and efficiency keep paying off for the business, since we're still holding our adjusted EBITDA margin steady while growing quickly. Turning to Slide 4, let's take a quick look at how Q2 2021 stacks up against both Q1 2021 and the whole of 2020. Each financial metric we've walked you through has gotten better. Revenue came in at $59 million for the second quarter, up 46% from Q1's $40 million on a sequential basis. The 186% growth we saw in Q2 2021 compares with 124% in Q1 and 88% for all of 2020. On these calls, we've said before that net retention rate is one of the KPIs we watch most closely < >. For Q2 2021, net revenue retention came in at 196%, up from a figure that was already strong in Q1 2021, which was 186%, and 159% for all of 2020. When it comes to adjusted EBITDA margin, the Q2 2021 figure held steady at 44%, the same as what we reported for the first quarter, and above the 40% adjusted EBITDA margin we posted in Q2 2020. Because the pandemic is progressing through different stages in the many countries where we operate, the behavior of both shoppers and sellers continues to shift; what we're seeing is heavier usage, reduced costs, and wider adoption of payment methods beyond the traditional ones. Those shifts in consumer behavior, in our view, are permanent and will keep benefiting our company. This quarter, we've experienced ongoing expansion from merchants already on our platform as well as new ones. Our staff around the world keeps flourishing and stays dedicated to supporting our merchants. We've adopted a mixed approach to work—whether at the office or at home—since we remain adaptable regarding where our team members prefer to do their jobs. That's nothing new for us. Before COVID, we already took a flexible stance on physical location, because of our worldwide merchant roster and broad emerging market footprint. Take today's call: the three of us are in separate places. I'm speaking from Israel, Sumita is located in California, and Diego is in Uruguay. We've kept pushing on expansion, increasing our footprint in Africa and Southeast Asia. Four additional nations went live during the first half of this year; during the second quarter of 2021 we brought on more than 10 new merchants; we keep gaining from having a diversified business spanning verticals, with certain ones like retail, streaming, and advertising seeing faster growth thanks to the post-pandemic return to work and economies gradually reopening. Compared with the prior quarter, our margins stayed steady, even as we kept putting money into our infrastructure and personnel. We've kept recruiting and bolstering staff numbers in essential roles. Headcount at DLocal rose 100% year-over-year. We perceive enormous potential in the markets, merchants, and products we support, and we plan to keep funding our people, platform, and technology as we chase growth. Our disciplined strategy toward growth and profitability so far has given us a distinctive standing. We plan to keep investing in growth, which means our margins could shrink in upcoming quarters. We'll stay disciplined to make sure each additional dollar we generate adds to our margin. Turning to Slide 5, which problems are we tackling? We're addressing three main challenges for our merchants. To start, payment methods tend to be local and highly varied across the 30 countries we cover. Beyond that, fragmentation keeps increasing as consumers take up newly introduced payment methods. Digital payment methods are displacing cash, creating even more chances for consumers to engage in digital online commerce. Merchants want to reach these fast-expanding end markets without having to construct the payment rails on their own. Next, in emerging markets it's tough to get strong conversion rates while also keeping fraud in check. We achieve both high conversion and reduced friction by validating automatically and routing transactions dynamically to several acquirers across payment methods. And third, we make complicated things easy for our merchants. If you've visited any market we operate in, you'd realize that no two markets across this region look alike. Our job is making sure merchants keep pace with the shifting rules and tax systems across emerging markets. If you look at slide 6, you'll remember we give merchants the ability to both collect and send funds. When money comes in the usual way — an emerging market user paying a global enterprise merchant — that requires intelligent routing, handling the payment, collecting withholding tax, managing FX, and settling funds to the merchant. Sending money works in the reverse direction, going from a global merchant out to an emerging market user — think of someone driving for a ride-hailing company or delivering food — and that requires disbursing payment to the user, managing income tax, managing FX, processing the payment, and collecting funds from the merchant. All of that is made possible by our platform, which taps into connections with over 600 payment methods used locally — covering cards, bank notes, wallets, and alternative options — along with local acquirers, banks, and nonfinancial institutions. We don't act as an acquirer in our own right. Instead, in each local market where we operate, we partner with multiple acquirers. Issuance-as-a-service is something we introduced recently for merchants around the world. A first pilot has begun with one merchant, and we expect this offering to pair very well with our existing products. Sumita, over to you.

Thanks, Seba. Turning to Slide 7. Strong industry tailwinds are a real advantage for our company — things like online commerce becoming more globalized, the digital economy's expansion, and the growth of digital goods, which cross borders even faster than physical ones. Then there's the aspirational middle class, which keeps growing and is eager to purchase the products and services that users in Western developed economies have long enjoyed. Purchasing power in these countries keeps rising, and a trend toward equalization of purchasing power is what's fueling global consumption trends. Global merchants are hitting their own growth targets. They've made commitments to their investors by venturing beyond their home markets in pursuit of growth. As a result, the usual lines around commerce continue to blur. That is the reason we expand in a natural way together with our merchants. The intricate nature of the markets we operate in is exactly what gives our solution such strength. Turning to Slide 8. We hired AMI to conduct a market study assessing our addressable market across the countries where we do business. Within those countries, e-commerce volume was put at $1.2 trillion, with $0.4 trillion of that being pay-ins, which is forecast to expand at a 27% annual growth rate; the remaining $0.8 trillion comes from pay-outs. According to AMI, pay-outs will make up a larger portion relative to pay-ins, meaning pay-outs should see growth at a percentage even above 27%. Both cross border and local to local e-commerce transactions are captured in this figure. China e-commerce volume isn't part of this figure, since the payments we handle there are quite limited. On top of that, global merchants don't make up the entirety of this volume. Even so, the $1.5 billion in TPV we posted for the quarter represents just a tiny slice of what lies ahead for us. During our second quarter, TPV climbed an outstanding 219% compared with the same period a year earlier, and in our first quarter it rose 159% year-over-year. Across the first half of 2021, TPV came to US$2.4 billion, which is 15% above the amount we processed during the entire 2020 year.

There are three main channels through which we grow: sales activities, broadening what we offer, and moving into additional markets. When it comes to sales activities, three levers get our attention: growing our existing merchants organically, being able to cross-sell via account management, and being able to bring on new clients. Regarding what we offer, we keep strengthening our suite of products by upgrading features for pay-ins and pay-outs, along with creating and introducing brand-new product lines. On the market expansion channel, we are always going deeper in the nations where we already have operations, while also making considerable efforts to bring what we offer into additional nations. To illustrate the second point, during Q2 we brought Vietnam, Malaysia, and Guatemala onto our platform. The strength of our platform, the operating leverage in our business, and how sticky our merchant relationships are all show up in our financial results. Our revenue growth plus EBITDA margin — The Rule of 40, as a number of you might refer to this measure — came to 129% in 2020, 168% in Q1 2020, and 230% in Q2 2021; we think the robust cash flow our business produces also backs an inorganic approach that will shorten our time to market. We intend to chase inorganic possibilities in order to speed up any one of our three growth channels, whether that means sales activities, product, or market expansion.

Okay, let’s take a closer look at all three of these growth vectors. Turning to Slide 10, the commercial vector: we experienced growth through both established and newly added merchant partnerships. Around the world, we're going after merchants—China included—who want to move beyond their home market and grow into Latin America, Africa, and Asia. The net retention rate you can see on this slide reflects several things: natural growth from our merchants, a larger share of their spending, more products adopted per merchant, more countries served per merchant, and more payment methods used per merchant. We kept pushing our net retention rate higher—196% in Q2 2021—by strengthening how we work with merchants we already have. To figure out NRR, we look at dollar revenues from merchants that were already on our platform and compare them year over year. So $100 of revenue in Q2 2020 from that same merchant group turned into $196 in Q2 2021. This KPI is one we track relentlessly, since it shows how strong and predictable our merchant ties are. More than 10 new merchants came onboard during this quarter, among them a U.S. content provider that went live with us across 13 countries—change.org, a worldwide short video sharing app, and a social network platform that builds a lip-syncing video, which launched with us in four countries. New client revenues reached $19 million in Q2 2021, compared with $1 million in Q2 2020. For this KPI, revenue from merchants brought on within the past 12 months counts as new clients. It’s a rolling measure used for year-over-year comparison. Now Slide 11, the product vector. Our path of product innovation never stands still. Emerging markets keep shifting, and we think staying nimble matters—it's our greatest competitive edge. During this quarter, we kept upgrading our pay-in solution with new features, including FlexibleScheduler, which allows dynamic fund transfers. We upgraded TaxManager so taxes can be handled with my payment methods, whether debit or credit. We brought in new integrations to create redundancy in card processing across existing markets, and we introduced additional payment methods. We also upgraded our pay-out solution, bringing instant pay-outs to more countries. We established direct connections with additional partners and banks, and we launched our fixed mobile app in Brazil using our own APK. We strengthened fraud and data capabilities through new machine learning models built for retail and gaming verticals. Profiling and fingerprinting tools were introduced, and we went live with device ID, along with other KYC enhancements. With our issuance-as-a-service offering, merchants can open new revenue streams and conveniently issue prepaid cards in local currencies, reaching millions of consumers across emerging markets. Slide 12, the geography vector: during the first half of 2021, we brought four countries into our network. Our approach isn’t to innovate in isolation—whenever possible, we aim to have a merchant ready and waiting as we enter a new country. What you're seeing here reflects how we grow with discipline. When we expand, it's driven by merchants — we follow them to wherever they're asking for a solution — and it's also driven locally, meaning we target markets where demand is something we already know exists. No single country carries our results. And forecasting by country isn't something we do either. What we measure is how our merchants are doing, nothing else. Turning to Slide 13, growth is strong across verticals, with TPV up 319% year over year, since diversification works in our favor. Whether any one industry vertical performs well or poorly doesn't determine how our business model fares. Verticals like ride healing and travel keep growing, and those began posting a strong volume comeback in the first quarter of 2021. Meanwhile, streaming, retail, advertising and financial services are among several verticals where we're seeing growth speed up. Now I'll pass things to Diego, who will walk through our financial highlights.

Thanks, Sumita. Let's begin on Slide 15. Over the five years since our operations began, our TPV has, on average, nearly doubled each year; we're seeing our TPV growth accelerate, hitting 319% in the second quarter of 2021 versus 60% in the fiscal year 2020. This growth gains from particular verticals like ride hailing and travel that took a hit in Q2 2020. We're also witnessing enormous growth across every other vertical, including streaming, retail, advertising and financial services. Let me point out that even in Q2 2020, at the height of the pandemic, we had still expanded 17% year-over-year. Although we anticipate ongoing strength in our business for the rest of the year, the percentage growth could normalize since the comparable quarters in the second half of 2020 had already experienced substantial growth. Let's shift to Slide 16. Our revenues for the second quarter of 2021 hit $59 million, which is 186% year-over-year growth from Q2 2020 and 46% quarter-over-quarter growth from Q1 2021. Our revenue over TPV ratio, or take rate, came to 4.1% in Q2 2021 against 4.3% in Q1 2021; that matches the take rate we had in 2019; this ratio shifts depending on the underlying business mix. In 2020 pay-in had shifted to a bigger share of our overall business, producing a higher revenue over TPV ratio of 5%. This ratio also declines as volumes with some of our biggest merchants rise, since we set price in tiers by volumes in our merchant agreements. Larger volumes with our biggest merchants typically lower the ratio, yet it's excellent for our business because they bring incremental EBITDA. Let's move on to Slide 17. We're quite happy with our ongoing improvement in adjusted EBITDA. In Q2 2021 our adjusted EBITDA rose to $25.9 million, which is 213% year-over-year growth and 45% quarter-over-quarter growth. Our adjusted EBITDA margin holds steady at 44% since last quarter and improved 384 basis points year-over-year. We've accomplished this while continuing to invest in our people, platform and technology. We plan to keep investing in growth, so our margin might decline in upcoming quarters as we maintain our discipline to drive profitable growth with every additional dollar that we process. Cost of services fell to 2.6% of TPV in the second quarter of 2020 to 1.7% of TPV in the second quarter of 2021, mostly because of business mix. Operating expenses rose $11.2 million year-over-year, largely driven by expenses tied to the secondary portion of the initial public offering for $3 million, stock-based compensation for $2.1 million and salaries and wages that grew $3.7 million as we doubled our headcount and brought key talent on board. Let's carry on with Slide 18. Out of the 186% year-over-year revenue growth in Q2 2021, $20 million came from existing merchants and $19 million came from new merchants. The comparable numbers for Q1 2021 were $15 million and $7 million respectively. When we talk about revenue coming from existing merchants, we mean money generated by businesses that had already been processing during the equivalent quarter a year earlier. Revenue from new merchants, on the other hand, refers to money generated by businesses that began working with us only after that same quarter last year. As I noted, our net revenue retention rate keeps getting better — it hit 196% in Q2 2021, up against an already impressive 186% in Q1. Let's move to Slide 19. Looking at our KPI per merchant, we can see sequential gains have continued. The typical merchant was active in seven countries during the second quarter of 2021, versus six in the first quarter. Since our payments network already spans 30 countries, we have considerable room to keep expanding our merchants into additional geographies. The same pattern holds for payment methods per merchant: we got to 62, compared with 53 in the first quarter, and we make over 600 payment methods available across the countries where we do business. With that, I'll hand things back to Seba for the closing remarks.

Thank you, Diego. Turning to Slide 20. So to wrap up, here are our five strengths. To start, we have a big and growing ecosystem of addressable emerging markets. Next, we're directly integrated with several of the biggest online merchants worldwide. Third, our single API tech infrastructure, which scales, turns complicated things into simple ones for our merchants. Fourth, we've diversified across both verticals and clients; and fifth, fast expansion goes hand in hand with our disciplined approach to profitability. And we're only getting started. We stay focused, humble and agile as we help our global merchants reach billions of users in emerging markets and carry out our growth strategy. Thanks for being with us today. I'll now ask the operator to open the line for questions.

Afternoon, everyone, and congratulations on those results. If I could, I'd like to ask two things. First, regarding your new merchant growth of $19 million — that was quite remarkable, over 2x what you achieved in the prior quarter. Could you share some sense of who these new merchants are? What size might they reach? Might any of them end up among your top 10 merchants? That's clearly a very substantial increase in new merchant growth, so my assumption is there are some truly big clients in there. Second, about your net revenue retention rate of 196% — that's obviously far above what you posted a year ago, and far above the soft guidance you'd given of roughly 150%, 160%. What trend do you expect for this figure during the second half of this year? Thanks.

Thank you, Jorge. Many thanks for being with us. On that first question, I believe one key clarification is that this is a trailing metric. So every customer we count as a new merchant is one that was already there a year back. That figure, as you'll notice, keeps evolving. That said, yes, it was a really strong quarter. Sumita mentioned in her remarks some of the merchants we managed to win, among them a social network, a U.S. content provider short video sharing app; and from our standpoint, Jorge, what matters more, we believe, is the trajectory rather than the starting point. Yes, we're very thrilled about these customers we've managed to onboard. If we have the ability to onboard them when they wish, then that's where we must ensure we keep adding value into new geographies, new products, and that's where our net revenue retention begins to trigger and begins to compound. So we're certainly excited about the current ones we've managed to onboard, but hopefully we'll get to see their growth over the many quarters ahead; and as for your second question on net revenue retention, Sumita, would you like to take it?

Absolutely, Jorge — glad to address that, and I want to be sure we're all clear on how this is calculated. When we look at revenue coming from new clients, it came to $19 million in the second quarter of 2021, while back in the second quarter of 2020 that figure stood at $1 million. The explanation for that jump is that it captures revenue from any client brought on board during the trailing 12 months. That means it might include a client added in Q3 of last year, or Q4 of last year, or Q1 of this year — all of it rolls up into that $19 million total. That's exactly why, set against Q2, the figure appears so large — $19 million compared with $1 million. As for your question about guidance, I'd say this quarter has been outstanding for us. If you examine the year-over-year growth rate figures, the other reason the percentages come in so high is that Q2 2020 fell right in the middle of the pandemic, so we're benefiting from a somewhat lower base a year ago in the second quarter. Looking ahead to the coming two quarters, I think our dollar figures should look good, though I wouldn't forecast percentage growth rates matching what we managed in the second quarter, since Q3 and Q4 of last year were stronger than Q2 of last year.

Thank you. I apologize for going back. But once more, my initial inquiry remains: which kinds of merchants are you onboarding whose revenue is scaling so quickly? And they're delivering such a big volume of fresh revenues, and whether this might be significantly larger. So, for instance, the top 10 revenue accounts, we're attempting to grasp how your revenues can climb from this point. And I believe it would be quite helpful if you could assist us in grasping who these customers are, what they do — how large they are — even the names would be extremely helpful to try to gain a clearer picture of how revenues can increase from here. Thank you.

Certainly. Okay. So to begin with, I believe it's valuable to talk conceptually about whom we targeted. We serve some of the biggest corporations globally, and lots of those names you can — you're able to view on our site. Naturally, we would read the state with — we attempted to ensure we would talk about it along with them. And those are the names we've managed to reveal publicly. But these are businesses that hold aspirations to function in more than 1 country, that are among the world's leaders in their respective fields. And we've declared some of those partnerships not just during the most recent quarter, but throughout the year. So many of those clients are available out there. We obviously hold expectations for them to grow into something far, far bigger, as Sumita was mentioning from that perspective. Well, we think our figures will be quite striking and we take enormous pride in them. We remain clearly just a drop in the ocean compared with the opportunity lying ahead. And we hold the view that those volumes in emerging markets are going to be propelled by the category of burden we serve, which are the biggest corporations globally. So that's how we're — that's all, I would be glad to share the names, but that's everything — I hope this gives some additional clarity regarding who those merchants are.

Thank you. That works. Congratulations once more — fantastic figures. Wishing you all the best, thanks.

Good afternoon, and let me add my congratulations on such impressive results. I have two questions that build somewhat on what Jorge asked. First, regarding new merchant growth: since growth at the IPO was so strong, you had said you didn't — you expected most of the growth to come from merchants you already have. So going forward, are there additional new merchants that could let you increase that growth beyond what you originally anticipated? Or to put it differently, since the IPO, has anything shifted such that you believe you can bring in more new merchants than previously, which would lift that growth? Second, also about the net revenue retention rate, following up on Jorge's question — you had guided to 150% to 160%, and you're far above that. Looking back, do you think 150% to 160% was overly cautious? Could you speed up even beyond the current 196%? I realize last year's comps were soft, but just to get a feel — the 196%, well above that 150%, it seems there ought to be room to exceed the 150% to 160% guidance you gave at the IPO. Is that reasonable to assume? Thank you.

I'll begin by addressing Tito's inquiry regarding net retention rate, and afterward we'll return to the topic of new merchants. Regarding net retention rate, when we examine our cohorts across a stretch of time — the explanation for why we've mentioned 150% to 160%, and incidentally, that figure also represented our net retention rate for the full year 2020, as you might recall from when we view cohorts over a somewhat extended horizon and study the patterns — what we observe is that the 160% figure is in fact fairly steady. So in the medium term, we continue to believe that this remains the appropriate net retention rate to keep in mind as those cohorts mature. During the earliest years, whenever we bring on a merchant, our NRR can be extremely, extremely elevated, yet it levels off just as we've talked about with you previously. Thus, we believe 150% to 160% continues to be the correct medium-term net retention rate. Consequently, it remains what we have modeled. As for the first portion of your question, concerning your new merchants, we genuinely believe that figure will decline, since we've brought on certain very sizable merchants during the last 12 months, as I noted — it's the rolling measure. So bear in mind, these aren't new merchants added solely during this quarter; they're any merchants absent from our local business in Q2 of 2020. Therefore it's a rolling measure of any new motions across the last 12 months; and so we've brought on certain merchants during the last 12 months who are contributing to that new client number. We anticipate that figure will decline over the next two quarters as that rolling measure shifts.

I want to add to that point — apologies — the second factor driving fresh merchant acquisition is being able to offer new offerings, both, sorry, new offerings across new territories. So you asked whether there are additional customers left to capture. What we anticipate is that by way of more territories, more offerings, and more capabilities, over the medium to long run, we'll keep bringing merchants on board, though not inevitably at the rate seen in this quarter. Still, we certainly think a great deal of opportunity lies ahead when it comes to new logos joining the platform.

Okay, thank you, Seba and Sumita — that helps. Perhaps I could ask one more question, and it's about the net revenue retention rate once again. I get that over the medium term, sure, it ought to move down toward 150, 160. Yet I suppose in the nearer term, it appears as though it should be tracking higher, correct? So the medium term — and maybe, I guess, to put a number on the medium term, is that something like in 2, 3 years? And in the nearer term, there seems to be a bit of upside, or does the medium term mean next year? Just to try to put a bit of a number on that medium term. Thank you.

Right, my sense is that it takes roughly 24 months starting from the moment a merchant joins; it's measured by cohort, Tito, and I believe we went over with you at the time of the IPO how those cohorts behave over time. Over the past 12 months, we've brought on some fairly sizable merchants. Our expectation is that they'll settle down around 24 months after first arriving on our platform. So what I'd say is that within the coming 12 to 18 months, that's when we see 150% to 160% as being a steady level.

Perfect. That's very helpful. Thank you, Sumita.

Hello, and well done on the results — those are really impressive numbers. What I mostly wanted to clarify concerns the revenues along with TPV: is the effect of the PrimeiroPay deal, which you completed in April of this year, also part of that? My understanding is that a portion of the new merger revenues could be coming from buying PrimeiroPay. Would it be correct to think so?

That's right — PrimeiroPay is in there.

Can you give us a sense of how total payment volume and revenues would have come in this quarter had PrimeiroPay not been part of the picture — so, excluding PrimeiroPay entirely?

Honestly, Neha, I doubt we're putting that figure out there. That said, I'd frame it this way: the impact simply isn't large enough to move the numbers in any meaningful way. The reason we don't break out PrimeiroPay's figures on their own is that, as you're aware, the transaction was structured as an asset deal — what we bought were PrimeiroPay's assets.

All right.

Those figures aren't something we'll be disclosing separately; however, they also aren't large enough that separate disclosure would be warranted.

All right, that's great. Now, turning back to operating expenses — they came in somewhat elevated for this quarter due to certain non-recurring items. But as we look ahead, ought we to anticipate somewhat higher costs? You noted that you foresee some pressure — some margin pressure could materialize. What's the outlook when it comes to expenses? Since revenue has been arriving quite robustly up to now, should we anticipate an increase in expenses? Are there plans for more aggressive geographic expansion across upcoming quarters — any detail you can share on that?

Hello, Neha. Diego here. Looking at Q2 2021, the primary non-recurring items we recorded consisted of IPO costs of approximately $3 million plus certain M&A costs tied mostly to PrimeiroPay of about $300,000. Everything remaining is organic, and we anticipate a sequential rise to persist going forward as growth continues. So those figures ought to be set aside, and what remains reflects the pattern set to carry on moving forward.