DLocal Limited (DLO) Earnings Call Transcript & Summary

Hello, everyone, and thanks for joining us on the dLocal earnings call for the fourth quarter and the full year 2021. I trust that all of you and your loved ones are doing well. My name is Soledad Nager, and I've recently taken on the role of Head of Investor Relations here at dLocal. First off, I want to say how happy I am to have come aboard at dLocal, which is the top technology payments platform with a focus on emerging markets. With me on this call are Sebastián Kanovich, who serves as our Chief Executive Officer, Sumita Pandit, our Chief Operating Officer, and Diego Cabrera, our Chief Financial Officer. A slide deck is being provided to go along with what we've prepared to say. This event is streaming live over webcast, and you can reach both the webcast and the presentation on dLocal's site at investor.dlocal.com. A recording will be made available soon after this event wraps up. Prior to continuing, I'd like to note that any statements looking forward that appear in the presentation or get brought up during this conference call rest on information available at present along with dLocal's existing assumptions, expectations, and projections regarding upcoming events. Although the company holds the view that our assumptions, expectations, and projections are sensible given what is currently known, you should be advised against putting excessive weight on such forward-looking statements. Actual outcomes could vary significantly from what appears in dLocal's presentation or gets talked about on this conference call, for numerous reasons, among them those outlined in the forward-looking statement and risk factor section of dLocal's 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 Seba.

Appreciate that, Sole. Good morning, good afternoon, everyone, and thank you for being with us. Ahead of diving into the numbers for Q4 and the whole of 2021, I want to open this presentation by noting that when we made our debut as a public company back in June 2021, that marked the start of a new chapter for dLocal. We take enormous pride in everything accomplished since we first began serving global e-commerce merchants more than six years ago. Our priorities and our values haven't changed at all. We stay laser-focused on building infrastructure, connecting the emerging markets to the rest of the world; we keep making the complex simple for our global merchants, and we keep redefining the online payments experience in emerging markets. We're also grateful for the ongoing support of our global team and our investors, and we've kept growing and delivering in spite of the challenges the pandemic created. The strong performance we delivered in 2021 has laid a solid foundation for fulfilling our long-term vision. We are literally just getting started. Moving to slide 3. For us, 2021 was a record year, with triple-digit growth in total payment volumes, revenues, and EBITDA. During 2021, total processed volumes crossed the $6 billion threshold; our TPV almost tripled, rising 193% over the prior year 2020. When we set our TPV in 2021 against three years back, we've grown it by 11x. Revenues for the year hit $244 million, up 134% over the prior year 2020. Comparing our revenues in 2021 with 2018, we've grown them by an impressive 7x. We hit an all-time high NRR of 219% in 2021 and 198% in the fourth quarter, as we expanded wallet share among our existing merchants and saw minimal merchant churn. Adjusted EBITDA for the year 2021 rose 136% year-over-year to $99 million. We delivered a strong adjusted EBITDA margin of 41% across the full year 2021. That was comparable to the 40% we delivered in the full year 2020. Our EBITDA margin for Q4 2021 came in at 38%, in line with what we expected for the second half of the year, as we concentrated on growing with large global merchants and kept investing in infrastructure and people to support our long-term growth strategy. These results came from the continued expansion of our relationship with both existing and new merchants using our platform, mainly driven by increased levels of digitalization in emerging markets. The inherent diversification of our business has kept strengthening our business fundamentals. We serve a broad set of merchants across geographies, sectors, and products; this acts as a robust natural hedge to different economic cycles and consumption patterns; we stay committed to agile decision-making, helping our merchants achieve their growth plans in emerging markets; we remain bullish and are optimistic about our prospects for 2022. Our relationship with our existing customers and our commercial pipeline is stronger than ever. At this point, we aren't really observing any significant shift in our operations driven by particular elements like elevated interest rates, greater inflation in certain developed economies, difficulties with logistics in certain regions, the conflict between Russia and Ukraine, or people heading back to the office; that's on slide four. As I noted earlier, our TPV came close to tripling during 2021 compared with the prior year. That considerable gain has come thanks to the rapid expansion of our merchants around the world. We feel proud that among our customers are several of the biggest global merchants and marketplaces, including Microsoft, Rappi, Mercado Libre, Spotify, Roblox, and Deel, along with numerous others whose names we can't disclose because of confidentiality agreements. In addition, over the course of the year, we brought on board fast-growing merchants eager to grow beyond the regions where they're based, for example Wish and Kuaishou, plus plenty of others. Our TPV expansion will keep being driven both by robust organic growth in the TPV of our merchants and by our capacity to grow wallet share, offer more products to merchants we already have, and introduce them to additional geographies and payment methods. That's on slide five. Our approach to business doesn't hinge on how well or how poorly any one industry vertical performs or is expected to perform. As you can observe, our merchants come from over 10 separate verticals. Over the past couple of years, we've watched various verticals move through their own cycles, yet our business as a whole gains when some verticals are expanding even as another might be experiencing a brief downturn. Ride-hailing and streaming throughout 2020 illustrate this balancing effect nicely; we're always seeking fresh chances to make our business more diverse while adhering to the top industry standards when it comes to risk. We've brought crypto in as a new vertical. We remain at an early stage with the pilots we're conducting, along with the use cases we're investigating across various geographies with a number of merchants. We'll keep assessing the risk framework and looking into growth areas. That's on slide six. Our merchants are also nicely diversified when it comes to geography. We cater to merchants based in over 40 nations. We've kept expanding our footprint in Africa and Southeast Asia, with Pakistan, Tanzania, and Uganda joining our infrastructure network in Q4 2021. Across all of 2021, we added nine nations to our network, which raised the overall count of nations where our service is offered to 35, up from 26 in 2020; the new nations we've added were chosen according to where our merchants want us to serve them, together with our own assessment of the potential for a new nation across our merchant base and the broader industry. Usually we already have a merchant waiting whenever we introduce a new geography, and that lets us achieve a high ROI on our move into a new nation. We think the infrastructure we're building in different regions is a major strategic advantage for our company, since it's complicated to add new countries and set up several local connections, and merchants appreciate the infrastructure network we're putting in place. Now on slide seven. Our growth efforts show up in the robust revenue increases we've had everywhere we operate. In LATAM, our dollar revenues rose 140% year-over-year. LATAM made up 92% of total revenues in 2021, while Asia and Africa made up 8% of total revenues; that was even though Asia and Africa revenues rose 86% year-over-year and grew almost 5x over the last two years. Our addressable market in our core markets in Latin America is huge, and we're happy to say that our core markets in LATAM keep seeing strong triple-digit growth as we strengthen ties with existing merchants or bring on new locals. We expect our share of Asia and Africa revenue to rise gradually over time as we keep cross-selling to merchants that first began working with us in Latin America into countries like Nigeria, Kenya, India, and Indonesia. We're also increasingly seeing merchants begin their relationship with us through markets in Asia and Africa and then expand into Latin America. The opportunity is still significant across our various regions, and we'll keep taking steps to further diversify our geographic footprint, particularly in Africa and Asia. Slide eight. Over the year, we've been able not only to upsell and cross-sell to our current merchants but also to bring on new merchants with strong prospects, like a leading U.S. video streaming platform that launched 13 geographies with us, a leading Chinese short video social app that has seen explosive growth globally, and a leading Latin American on-demand delivery platform. Our total merchants on our platform have risen steadily from 300+ in 2020 to 400+ in 2021. If we look at merchants with TPV greater than $100,000 annually as a threshold, we see that our merchant count rose massively from 150+ in 2020 to 240+ in 2021. Going forward, we'll focus on a minimum TPV threshold to provide a merchant count for our large global merchants, since it's a better indicator of our clients' performance. As we bring on new merchants and scale existing ones, our revenue share from our top 10 merchants has kept declining. Revenues from top 10 merchants fell to 56% in 2021 compared to 64% in 2020 and 73% back in 2018. I'll now hand it over to Sumita.

Thank you, Seba. It's a pleasure to be here with everyone today. I'm looking at slide nine. This slide contains quite a bit of information, so allow me to break down the main points. On this slide, we display how each of the groups of merchants we brought on over the past several years has performed. Let's direct our attention to the left side. Three important observations stand out. First, every cohort continues to deliver robust TPV expansion annually. Second, every cohort begins from a higher base than the one before it, which proves we can keep layering on additional volume from newly acquired merchants during the initial year of those relationships. Third, the 2018 and 2020 cohorts recorded the strongest growth in 2021. Merchants onboarded in any particular year usually need a few quarters before meaningful growth appears on our platform. Growth for these particular cohorts came from the results delivered by certain blue-chip customers that rapidly scaled up their volume while we simultaneously introduced new geographies and payment methods for them, which allowed us to capture a substantial share of wallet with those clients. Now let's turn to the right side of this slide. You can observe how revenues over TPV, or take rate, trended for every cohort across 2021. If you've been following us since the IPO, you've probably heard this before: we don't run this company with the goal of pushing take rate as high as possible, and it isn't something we plug into our model as an input. What happens is that it comes out the other end, determined by the mix of our business, how much volume each merchant processes, and the pricing tiers tied to volume that apply to merchants as their volumes grow. On top of that, take rate looks different depending on the region. Take LATAM versus Africa versus Asia — each one is distinct — and it also shifts depending on the product and the payment method involved. Because of all these moving parts, our take rate has gone up in some of the most recent quarters and down in others. There are three things worth noting about the right-hand portion of this slide. Looking at each cohort, our take rate has stayed basically level versus 2020. The pricing points vary from one cohort to another depending on business mix, and what we continue to see is that many different factors make merchants want to partner with us — price is only one of those factors. When you look at our average take rate falling from 5% in 2020 to 4% in 2021, that drop mainly comes from changes in the mix of underlying business. The two cohorts that grew the fastest in 2021 were the ones from 2018 and 2020, and they came in carrying a lower take rate, mostly because their business mix includes a greater share of payouts and local-to-local payment flows. Third, it deserves mention that the 2021 cohort of merchants recorded a take rate above our overall take rate for 2021. We've added this slide to demonstrate our robust cohort-level performance, and looking ahead, we anticipate sharing this cohort data on an occasional basis. Before we move to the following slide, I want to note that what we care about is growing our gross profit dollar, which Diego will walk through in the financial section. That is the way we run this business. Running things on a take rate basis is not how we operate. Nobody on our sales team has incentives tied to maximizing the gross take rate. Their approach instead involves hammering out deals designed to get the highest possible total net dollar value, after deducting whatever processing expenses arise for dLocal from that arrangement. Turning to Slide 10, three primary drivers of our expansion are visible here: commercial work, growing our products, and moving into new geographies. A land and expand model sits at the heart of what we do commercially. The growth we see stems from our merchants growing organically on their own, our ability to sell additional offerings through account management, and our ability to attract fresh clients. For Q4, our NRR reached a striking 198%. When figuring NRR, we examine dollar revenues produced by merchants already using our platform, measured against the same period a year earlier. Like we mentioned previously, over the coming year we expect NRR to remain above 150%. We're constantly pushing forward with new product development. Because emerging markets are always changing, staying alert and nimble is essential — that's how we remain a leader in our industry. All year long, we continued to build out what we offer, refining our payments and payouts capabilities while also creating and rolling out fresh product categories, such as issuing as a service. When it comes to expanding geographically, as Seba noted before, we entered nine additional countries in 2021, and six of those are located beyond Latin America. We intend to go deeper in the markets where we're already active and to keep bringing on more countries. To illustrate how we're building beyond Latin America, we've moved two of our top people to Singapore and South Africa. They're heading up commercial operations and expansion in Asia and Africa, in that order. That way, dLocal's culture carries over into a new region, while we also put effort into local recruiting so we can scale more quickly. Our company throws off a lot of cash, and we think that gives us room to add an inorganic layer that speeds up how soon we reach the market. Across each of our three growth vectors, we intend to make carefully chosen acquisitions when they can help us move faster. Since FinTech valuations have come down and the sector has corrected, plenty of companies now look like better buys, and we keep reviewing M&A possibilities, even though nothing is close to happening. Moving to the following slide. Slide 11 highlights how we keep expanding the reach of our merchants into additional nations and ways to pay. During 2021, the typical enterprise merchant with us handled transactions across seven nations and utilized over 67 different payment methods. By contrast, back in 2018, that average stood at four nations and 29 payment methods. Credit cards continue to account for approximately 35% of the volume we handle, so a considerable portion of our business relates to payment options beyond credit cards. With more than 700 payment methods available in 35 countries, merchants value having a single API that connects them to all those choices through one shop — and that gives us a big opening to expand our customer base while making it harder for rivals to break in. Our attention remains on squeezing more revenue from the clients we already have and capturing a larger portion of their spending. Turning to Slide 12. This slide shows the volume of opportunities in our sales pipeline, split between current and prospective clients, and how that compares with what we had back in March 2021, before our IPO; across the past year, opportunities have climbed significantly in both categories. Going public gave us a lot more exposure with our merchants and showed what we can do, and it made people see us as a dependable payments partner they can trust. Starting with the clients we already have, there's an account management group whose only job is to grow those relationships. They work hand in hand with customers to handle what they need right now and to sell them additional payment methods, additional countries, and additional ways to use our products. Right now we're tracking more than 190 live chances with current clients to move into new markets, offer new products, or add new payment methods.

We're at various points with these proposals — more than 50 pricing proposals have been sent out to clients we already have, and roughly 40+ are set to launch. That total of open opportunities stacks up against roughly 60+ as of March 2021, which works out to a robust threefold jump in under 12 months. Turning to new clients, our sales funnel keeps widening, driven by how fast merchants are coming online and ramping up, the rise of the creator economy, the weight our merchants give to digital marketing that often crosses any geographic border, and the viral user growth that a number of our fastest-growing merchants see. We anticipate this pattern will persist as fresh companies appear and seize online dominance far more swiftly now than was the case just a few years ago; these firms — what we refer to as the next tier of merchants — don't always match the size and type of the mega merchants already in our portfolio, yet they aren't SMBs either. They're largely regional players eager to grow beyond their home markets, and we make it possible for them to reach consumers anywhere on the planet. As this slide shows, we hold open opportunities with over 640 new merchants, with more than 250 pricing proposals sent to new clients and over 100 awaiting launch. After going live, ramping up volumes with a merchant generally takes us three to six quarters. Opportunity count has grown considerably, roughly twofold versus the 350+ recorded in March 2021. The merchants we anticipate onboarding across 2022 hail from varied businesses including commerce, gaming, crypto, messaging apps, and payroll, among numerous others. Slide 13. Here we present a recap of the key enhancements made over the year to our current product portfolio. On payments, we began providing new integrations during the year to add redundancy to our card processing in markets both existing and new; we upgraded our solution with added features including network tokenization, which eliminates the need to deal with sensitive cardholder data since network tokens get maintained and updated automatically. We brought Pix into Brazil, letting users make instant payments, which delivers an improved user experience, fresh integration choices via full API solutions, and even lets local merchants hold their own Pix keys. We just earned an award for our Pix integration — details on that initiative are available on our website. We upgraded our tax manager so tax can be handled by payment method, whether debit or credit. During Q4, we rolled out a new auto debit payment offering in India aimed at subscription business model companies, covering both domestic and cross-border transactions, to satisfy the newest auto debit regulations. We likewise boosted card and ATM acceptance rates via improved smart routing, chaining, and UX refinements backed by rigorous A/B testing. Regarding payouts, we broadened our instant payout offering into additional nations—before, it was only offered in Nigeria and Brazil—and we upgraded the Pix payout product through our Pix mobile application. Our logic and automations were also strengthened so that we could get past constraints in local rails processing. In addition, over the course of the year, we brought on more than 20 direct connections with new partners and banks, which supports processing redundancy and capability improvements across both existing and new markets. Slide 14. Our product portfolio was broadened as well; we introduced Defense Suite, which contains our Smart Defense and Defense Manager offerings. Beyond that, we kept enhancing our fraud and data modules by adding new machine learning models designed specifically for the retail and gaming verticals. We brought profiling and fingerprinting tool live, device ID live, along with other KYC enhancements; back in the middle of last year, we had also rolled out our Issuing-as-a-Service solution, letting merchants open up new lines of revenue and conveniently issue prepaid cards denominated in local currencies so they can reach millions of consumers across emerging markets. This product joins our lineup as yet another building block toward what we see as a one-stop shop, and it is especially compelling when you look at bankerization rates, which sit significantly below those of developed countries; we have rolled this solution out in four markets and have signed new deals that we are currently integrating and that will go live soon; we have teamed up with local banks acting as issuers to help the product grow. Even though it is still very early days, we stay bullish regarding the evolving use cases for our merchants. Slide 15. We keep investing in our business as we respond to the incremental opportunities in front of us. At the close of 2021, our headcount stood at 535 employees, which was up 73%, or 225 FTEs, versus the prior year. Throughout the year, we expanded substantially across every area, with special emphasis on technology and products plus sales and marketing, and also in our support functions so they could be brought up to the standards and best practices of public companies. We will keep hiring and scaling our team, concentrating on technology and product along with sales and marketing; our plan is to pursue that with a balanced approach, ensuring we bring in talents that align with our culture. With that, I'm going to turn it over to Diego to review our financial highlights.

Appreciate that, Sumita. Let's kick things off on slide 17. Over the course of the year, we observed robust TPV expansion. During 2021, our TPV crossed the $6 billion mark, up 183% compared to the prior year. Looking at Q4 2021, TPV rose 145% versus the same quarter a year earlier. This expansion stems from how our enterprise merchants performed and kept growing across the majority of verticals, most notably ride-hailing, streaming, advertising, software as a service, on-demand delivery, and commerce. Throughout 2021, our pay-ins and payouts both saw triple-digit increases. On the pay-ins side, TPV climbed steadily each quarter, and in Q4 2021 specifically, pay-ins were up 190% year-over-year and 14% versus Q3 2021. Where payouts TPV is concerned, we experienced near-term volatility that led to a sequential decline in Q4 2021, because unusually elevated merchant volume came from certain merchants during Q2 and Q3 of 2021, when those merchants chose to launch large marketing campaigns. Measured against the prior year, our payouts TPV continues to show robust double-digit expansion. The best way to gauge the strength of our business is across somewhat longer horizons, as we keep deepening our relationships with merchants. Looking ahead, we anticipate our business will keep expanding robustly in 2022, across both pay-ins and payouts. Slide 19. Revenues likewise hit a fresh all-time high, reaching $76 million in Q4 2021 and $244 million across the full year 2021, having risen 120% and 134% year-over-year, respectively, and 11% versus Q3 2021. Our revenues divided by TPV, or take rate, declined from 5% in 2020 to 4% in 2021, largely due to shifts in the underlying business mix toward bigger global merchants and a greater proportion of local-to-local payments, as Sumita explained earlier. In Q4 in particular, we observe a modest rise in take rate, from 3.8% to 4.1%, relative to Q3 2021, driven mainly by a larger share of pay-ins. Slide 20. Focusing more closely on revenue, we keep producing robust revenue expansion from both our current customers and our new ones. Revenues from existing merchants are the revenues generated by merchants that were already processing during the equivalent period a year ago. Revenues from new merchants are the revenues generated by merchants that began operating with us after that equivalent period a year ago. Since our merchants usually go through a ramp-up period of three to six quarters, we view revenues from new merchants as merely an early signal of what our new customers could ultimately deliver. During 2021, out of the 134% year-over-year revenue growth, 119%, or $124 million, came from existing merchants, while 15%, or $16 million, came from new merchants. For Q4 2021, out of the 120% year-over-year revenue growth, 98%, or $34 million, came from existing merchants, while 22%, or $8 million, came from new merchants. A number of the fast-growing merchants onboarded in late 2020 shifted into the existing merchants bucket during 2021. Those factors helped drive our annual net revenue retention to 219%, with the fourth quarter coming in at 198%. Several things account for this elevated net revenue retention: we keep churn at a minimal level, our merchants keep expanding, and we perform well when it comes to capturing a larger portion of the wallet. That said, we don't anticipate sustaining those same net revenue retention figures in 2022, because 2021 marked a record high for both revenue and TPV growth, which makes for harder comparisons, especially starting in the second quarter of 2022. So over the coming 12 months, we look for a solid net revenue retention rate above 150%, consistent with what we've delivered in earlier years. Moving to Slide 21. As Sumita said, our commercial priority is raising the gross profit dollars we earn per merchant. Because of that, our gross profit keeps expanding at a solid pace; during 2021, our gross profit grew by more than twofold, rising 117% year-over-year to reach $130 million. We managed to scale gross profit in every quarter, hitting $39 million in Q4 2021, which is up 88% year-over-year and up 13% versus the third quarter of 2021. For the full year 2021, our cost of services came to 1.9% of our TPV, versus 2.1% in 2020. That decline came primarily from a larger share of local-to-local pay-ins carrying a cost below our average. During the fourth quarter of 2021, our cost of processing stood at 2%, versus 1.9% in the third quarter of 2021 and 1.8% in the fourth quarter of 2020. These quarter-over-quarter rises came largely from a bigger share of pay-ins, both local-to-local and cross-border, whose average cost exceeds that of payouts. Turning to Slide 22. Adjusted EBITDA for the fourth quarter of 2021 came in at $29 million, up 112% year-over-year. Our adjusted EBITDA margin was 38%, versus 39% in Q4 2020 and unchanged from the prior quarter. For the full year, adjusted EBITDA rose 136% year-over-year to $99 million and accounted for 41% of revenue, versus 40% in 2020. This reflects our dedication to keep generating profitable growth. Looking at operating expenses for the year, and excluding one time or non-cash items consistent with how we calculate adjusted EBITDA, they rose 81% year-over-year, a bit above our 73% headcount growth, since we brought on more senior team members and expanded professional services as part of operating as a public company; we anticipate our EBITDA margin for 2022 will stay above 35%; over the medium term, as our top line expands and we gain scale, we still expect operating leverage in the business and, with it, the capacity to widen our margin; with that, I'll hand the call back to Seba for closing remarks.

Appreciate that, Diego; turning to slide 24. Looking forward, the opportunities we see ahead have us quite enthusiastic; our attention stays fixed on our sizable and growing TAM, the direct connections we have with merchants, infrastructure that scales, our presence across a varied set of verticals, and our dedication to both growth and profitability. From particular elements like an elevated interest rate, significant inflation in certain developed markets, logistics difficulties in specific regions, the conflict between Russia and Ukraine, or the return to work, we don't expect any shift in what we anticipate for the whole of our business in 2022. Although specific merchants might carry unique exposure to such elements, we keep gaining from the variety within our merchant base, our geographies, and patterns of consumer behavior as we extend our payments infrastructure throughout 35 countries and beyond 700 payment methods; our confidence in our business and our 2022 expectations stays strong, stemming from both current clients and the arrival of new ones. As stated during earlier quarterly earnings calls, we restate our projection that our net retention rate will sit at the 150+ mark over the coming 12 months, and we anticipate solid new client revenue given the pipeline we currently observe. For the entire year 2022, we expect our EBITDA margin to exceed 35%. Over the medium term, we keep anticipating operating leverage within our business and thus the capacity to grow our margins. Our gratitude goes out to our merchants, employees, and investors for your ongoing backing. I'll hand things back to the operator now so we can begin taking questions.

Hi, everyone. Morning. I appreciate you taking my question. There are two things I'd like to ask, so if it's alright, let me begin with the first. What I'd like to get a sense of is how this current geopolitical situation might affect your business. As far as I know, you don't operate in any of those nations at present, but my understanding is that a number of your clients are headquartered in some of them. I just want to know whether that's accurate, and how the company is handling it, and whether we ought to anticipate any consequences for TPV and revenues as a result. After that, I'll move on to my second question, please.

Hey, Kaio. This is Sebastián. Thanks so much for asking. As of now we carry zero exposure to Ukrainian and Russian operations; as we've said, no payments get processed by us in either of those two nations, and in Russia we have no merchant base at all. For 2022, we anticipate no effect from this. Is that right?

All right, that's excellent. Now for my second question: according to the slides, during this year you brought in 9 additional nations along with what appears to be over 100 merchants. Could you share some specifics regarding the 2022 pipeline, and what should we anticipate when it comes to revenue generated by newly added merchants across the year?

Of course. Kaio, in my view it matters a lot to separate out the geographical growth. Keep geographical growth apart from the fresh revenue we bring in. Our geographic reach will keep growing. As Sumita already mentioned, we're focused on making certain that we keep pushing harder within the 35 geographies we currently operate in; we anticipate being able to keep adding geographies whenever our merchants need that. Remember that when we go live in a new nation, we usually already have a merchant waiting. For us, geographies carry huge significance — or rather, expanding geographically carries huge significance — because it gives us additional points of contact with our merchants. The greater our reach, the stronger our odds of getting a merchant to connect with us. That's the point where net revenue retention really comes into play. We're aware that after integration happens, our merchants stick with us, and beyond that, they keep pushing additional revenue dollars through our platform.

All right, that's helpful. One more question — what should we anticipate when it comes to revenue generated by newly added merchants over the course of the year? You referenced a net revenue retention rate of roughly 150, but as far as contributions from new merchants go, can you provide any guidance?

Of course. Sumita, would you like to handle that?

Absolutely. Kaio, as you've heard from us, our pipeline looks extremely robust; however, we aren't providing any particular forecast when it comes to revenue from new clients. You've witnessed the steady way we've delivered on that front, not only across the full year but also in each individual quarter; we believe substantial growth lies ahead, yet because of how fast we're expanding, what we're handing you is our finest projection of net retention rate, since that figure stems from existing clients and can be measured with greater precision. When it comes to new clients, no specific range is being offered right now in 2022, though we do anticipate it will be strong.

All right, excellent. Many thanks. Speaker 9 speaking: Hello, everyone; Jason couldn't be here, so this is Cassie filling in. To start, I'd like to know — during the Analyst Day you have coming up, will medium-term financial targets be shared by you folks?

Hello there. I appreciate you asking that.

Thanks for the question. Sumita? Yes. Yes, go ahead.

My apologies, Sebastián, and thank you for raising that. As of now, no specific date has been set for our Analyst Day. Our expectation is that it will happen within the coming few weeks. The reason we chose to push it back was the geopolitical climate at present. Once that Analyst Day takes place, we'll lay out how we view the business at that moment, though beyond what we've already passed along to you — including our net retention rate — we aren't providing detailed guidance for the entire year. That figure should come in at 150%+. On the EBITDA margin side, we're likewise pointing to a level of 35%+. As you've observed, every quarter since our IPO, along with the guidance issued from that time onward, has seen us deliver ahead of what we projected. This aligns closely with the outlook we provided to you in Q2, Q3, and now Q4.

All right, understood. Regarding those margins you brought up, the 35%+, could you put some numbers behind the particular investments being made? I mean, in 2021 you achieved 40%, above 40% of EBITDA margins. You know, I'm aware that sales and marketing investments plus headcount were discussed, but could you provide somewhat more detail on where those extra investments are going to land in 2022 compared with 2021? Thanks.

Absolutely. Appreciate the question; from our perspective, investments always boil down to technology and infrastructure on the team to back that up. We have a highly ambitious infrastructure expansion plan in which we keep adding new geographies, new products, and that indeed calls for investments. Those investments, we do expect, will pay off over the long term. We believe our business has demonstrated the capacity to be very profitable, so we do want some room to be able to put more money in as we see fit. Our commercial teams, our sales teams, and our support teams will keep growing, bearing in mind we are still operating with a fairly small organization; we prefer it that way. The culture is something we want to preserve, but ultimately we do expect to be able to invest more going forward to ensure we have a better product, better technology, and better infrastructure for our merchants.

All right, understood. Let me squeeze in a very brief follow-up. I was simply wondering whether there are any mix-related consequences for volume or take rate that we ought to keep in mind over the short term?

Diego, Sumita, please jump in if you'd like; we've just wrapped up an incredible quarter and a year that fills us with tremendous pride; our confidence regarding next year's outlook has never been higher. From a offerings standpoint — the product lineup we possess, the infrastructure we've built — we've never been in a stronger position. Take rates will, we expect, move around as time passes. In Q2, Q3, and now Q4, you've watched them rise and fall. Business mix alone drives that. In our view, that's a sign of health. It shows we have numerous business lines and numerous geographies being utilized by our merchants. No particular expectations are on our side, yet we hold enormous optimism about what 2022 will bring.

All right. Thank you, everyone.

In Q4 in particular, I believe you can observe the Take rate rising from 3.8% to 4.1%, which is exactly why we consistently point out that quarter-to-quarter changes can occur in our business. Looking ahead, just as we've always stated regarding the medium term, we anticipate these rates will decline sequentially, though in any given quarter they might rise or fall. Regarding the 150+ net revenue retention, we see opportunities for expansion across Pay-ins, Payouts, Cross-border, Local-to-local, as well as cross directions.