DLocal Limited (DLO) Earnings Call Transcript & Summary

Thanks so much, operator. Hello, everyone, and I appreciate you being with us for the Q3 2022 earnings call. In case you haven't had a chance to look at our earnings release, you can find a copy in the financial section of our investor relations website. Joining me on this call are Sebastián Kanovich, our Chief Executive Officer, Jacobo Singer, our President and COO, Diego Cabrera Canay, our Chief Financial Officer, and Maria Oldham, Vice President of Corporate Development and Investor Relations. A live presentation is being provided alongside our prepared remarks; this event is going out live through webcast, and you can access both the webcast and the presentation on dLocal's website at investor.dlocal.com. A recording will be made available soon after the event wraps up. Before we move on, I want to note that any forward-looking statements contained in the presentation or brought up during this conference call rest on information currently available as well as dLocal's present assumptions, expectations, and projections regarding future events. Although the company believes our assumptions, expectations, and projections are reasonable in light of information currently available, you should be careful not to rely excessively on those forward-looking statements. Actual results could differ materially from those contained in dLocal's presentation or talked about on the conference call for many reasons, including those laid out in the forward-looking statement and risk factor section of dLocal's filing with the Securities and Exchange Commission, which you can find on dLocal's investor relations website. With that, I'll hand the conference over to Seba. Thank you.

Hi, everyone, and thank you for being here today. It's a pleasure to share that we've delivered yet another robust quarter, posting record financial results that blend expansion, prudent investment, tightly focused execution, and meaningful strides toward creating the top financial infrastructure across emerging markets. Our operations now span 39 markets, which lets global merchants connect with more than 2 billion consumers. Everything is reached via our one dLocal approach — that means a single contract, a single platform, and a single API. During Q3, TPV came in at $2.7 billion, while revenue hit $112 million. Even against the tough comparison from 2021, we achieved strong gains in both TPV and revenue, rising 51% and 63% year-over-year, respectively. On a quarter-over-quarter basis, TPV was up 12% and revenue up 11%. Our client retention remains solid, with NRR of 152% for Q3 2022. Also worth noting: we keep expanding gross profit and EBITDA in dollar terms steadily each quarter. Gross profit climbed to $54 million, a 56% increase year-over-year. Adjusted EBITDA rose 58% year-over-year, reaching $42 million. Each was up 9% quarter-over-quarter. Our guiding philosophy remains disciplined, profitable growth. We kept our adjusted EBITDA margin fairly steady at 37%, versus 38% across the prior 4 quarters; that's on slide 6. Our push to expand geographically beyond Latin America keeps producing excellent outcomes. This quarter brought unmatched growth from Africa and Asia, where revenues jumped 4x year-over-year and 80% quarter-over-quarter, hitting $25 million. That exceeds the $21 million in revenue we posted across the 12 months of 2021. We anticipate continued solid growth as we cross-sell to merchants whose relationships began with us in Latin America and who then move into Africa and Asia, and the reverse as well. This demonstrates a strong network effect from our financial infrastructure along with the caliber of our solutions. Turning to slide 7 and our LATAM business, revenue there rose 39% year-over-year to $87 million. It was flat quarter-over-quarter because of short-term market constraints in the Argentine cross-border operation. Excluding Argentina's cross-border business, LATAM revenue grew a solid 43% year-over-year, or 7% quarter-over-quarter. Argentina's government temporarily altered the rules for accessing the foreign exchange market regarding imports of certain goods and services, which hurt our Argentina cross-border volumes. Conditions improved over the quarter, and we succeeded in continuing to process the majority of our TPVs. Broadly speaking, our business keeps gaining from geographic diversification, since no single country represented more than 20% of total revenues in Q3 2022. I'll now pass things to Jacobo to discuss our international expansion.

Thanks, Seba. Hello, everybody. We keep carrying out our plan to move into additional markets. I'm glad to share that during this quarter, we brought 2 additional nations into our portfolio, which means we now have operations across 39 distinct emerging markets. In the quarter, we brought in Nicaragua, which lifted the overall count of markets we serve in Latin America to 16. We've also brought Saudi Arabia into our financial infrastructure network, raising the overall count of markets served across Asia to 10. Two primary elements keep driving our geographic growth. First, serving the requirements of our merchants, and second, how appealing the market is. Money we put into geographic growth usually pays off quickly, because, firstly, we typically have a merchant waiting in line whenever we bring on a new nation, which creates instant demand; that's what happened with both Nicaragua and Saudi Arabia. Secondly, thanks to our dLocal platform, every fresh geography or payment method turns instantly accessible for our whole merchant base. We've been working not just to bring on additional nations, but also to strengthen our footprint in the nations where we already have operations, delivering a best-in-class local solution for our global merchants. Over the past quarter, we kept upgrading our infrastructure and network, bringing in over 10 additional payment methods across Africa and Asia. Our growth strategy remains rooted primarily in organic growth; even so, we keep looking at selective inorganic possibilities to boost our scale, network, and products in key markets. We serve merchants from many different verticals and from every corner of the world. Our business model doesn't hinge on how any single vertical performs or what its outlook is, since we work across over 10 of them. Through the years, we've watched various verticals move through cycles, yet there are always winners and losers; we're always hunting for fresh opportunities to diversify our business further and make it more resilient. We take pride in partnering with and serving some of the biggest global merchants and marketplaces, such as Microsoft, Shopify, Dropbox, Shein, Spotify, Delivery Hero, and Deel, plus other prominent global companies that face disclosure restrictions. As the left-hand side of the slide shows, we keep seeing additional merchants come onto our platform. The total count of enterprise merchants on our platform has risen past 600, and right now we actively manage roughly 200 key accounts. Our merchants appreciate our tech DNA and merchants first approach, tackling complicated needs with a handy one-stop solution. The chart on the right illustrates how we keep succeeding in helping our merchants operate in more nations and accept more payment methods. Across the first 9 months of 2022, our enterprise merchants on average processed payments in 8 nations, accepting on average 78 payment methods; that stacks up against an average of 6 nations and across 44 payment methods in 2020. It's clear that beyond expanding organically alongside the merchants we already serve and capturing more of their wallet share, there's a huge chance for us to keep growing by entering new geographies, adding new payment methods, and constantly advancing what we build. At this point I'll hand things over to Maria, who will walk through some pertinent KPIs concerning our 10 biggest merchants.

Thank you, Jaco. Hello, everybody. I'm Maria Oldham, and it's a real pleasure to be heading up corporate development and investor relations here at dLocal. I'm eager to get to know many of you in the time ahead. Revenue generated by our ten largest merchants keeps climbing each quarter, hitting $59 million in Q3 2022, which represented 53% of our overall revenue. Over the medium term, we expect customer concentration to come down, even though during this quarter our top ten merchants beat the average. Which merchants land in our top ten can shift from one quarter to the next as new ones join and existing ones grow. During Q3 2022, our top ten merchants spanned a range of verticals, such as ride hailing, commerce, streaming, advertising, financial services, and on-demand delivery. The strong expansion among our bigger merchants comes from a mix of ongoing product innovation and a deeply customer-centric mindset. Our account managers build deep, trusting relationships with merchants, which gives us ongoing insight into what they need and lets us keep creating and cross-selling products that meet those demands. We've been successfully widening our geographic reach within our top 10 merchants. In Q3 2022, our top 10 merchants processed payments with us across 10 countries on average, compared with 7 countries a year earlier, and the highest figure was 19 countries versus 11 last year. We keep bringing existing customers from Latam into Africa and Asia. As an example, 9 of our top 10 merchants already process with us in those regions, up from 5 of 10 a year ago. As you can tell, we also have multiple growth levers among our top merchants. Beyond expanding through new geographies and new payment methods, we stay focused on gaining share of wallet so we can boost monetization further within merchants we already serve. Now let's go through our team growth and distribution. To begin, I want to remind everyone about our culture and how we work. From the very start, we've kept a lean culture, stayed highly disciplined with each dollar we spend, and remained focused on profitable growth at all times. Also, since we operate in a rapidly growing emerging market, remaining lean has been crucial for staying agile and reacting quickly; this has been a key competitive advantage we take pride in, and we keep building on it, particularly amid a challenging macro environment. Within this lean culture, we keep investing prudently in growing our global team, responding to new opportunities we identify and pushing toward our long-term objectives. At the close of Q3 2022, we had 712 employees, up 34%, or 180 FTEs, year-over-year. Our headcount has grown considerably outside the Americas as we prioritize hiring locally to tap on-the-ground knowledge and build a deep understanding of local market idiosyncrasies; we reached 146 FTEs in Africa and Asia by the end of September 2022, equal to 21% of our workforce and a 103% increase year-over-year. Looking at the year so far, we've expanded across every function to back our growth opportunities — that covers sales and marketing, operations and expansion, plus tech and product teams. Positions tied to tech still make up roughly 40% of our FTEs, while our sales and marketing group and our operations and expansion group each represent about 20% of our FTEs. Diego is going to walk through the financial highlights now.

Thanks, Maria. Hi, everyone. Let's begin on slide 12. Our business continues to grow, supported by a customer base that's well diversified. TPV growth was robust this quarter, reaching $2.7 billion — up 51% year over year and 12% above Q2 of 2022. On the pie chart to your right, you can see we work with merchants across more than 10 verticals, and each has a balanced position in our portfolio — no single one accounts for more than low 20s% of our TPV in Q3 2022. So the performance or outlook of any one industry vertical doesn't determine how our business model does. The TPV gain reflects how merchants did and continued to expand across most verticals, particularly commerce, on-demand delivery, travel, software as a service, advertising, and financial services. I'd also note that we saw improvement in both pay-ins and payouts this quarter. Specifically, in Q3 2022, pay-ins delivered double-digit growth year over year plus high single-digit growth quarter over quarter. Payouts volumes continue to strengthen, with double-digit growth quarter over quarter and year over year, despite the difficult comparison, since some merchants had unusually high volumes while running major marketing campaigns during that period. As for our cross-border and local-to-local volumes, both are growing healthily year over year and quarter over quarter. This quarter saw local-to-local TPV grow, driven by the strong performance of certain merchants, along with a deceleration in cross-border volumes in Argentina, which I brought up earlier. Revenues also set another record, up 63% year over year and 11% quarter over quarter to $112 million in Q3 2022. Our revenue over TPV, or gross take rate, was 4.1% this quarter, compared with 4.2% in Q2 of 2022 and 3.8% in Q3 of 2021. Quarter-to-quarter changes reflect shifts in business mix. That modest decline from Q2 2022 stems from a bigger share of payouts and local-to-local flows, while the take rate improved versus Q3 2021 because pay-ins contributed relatively more year over year. Looking more closely at revenues, we sustained strong revenue growth from both our existing and our new customers. Revenues from existing merchants refers to those revenues generated by merchants already processing with us during the same period a year earlier. Revenues from new merchants refers to those revenues generated by merchants that began operating with us after that same period a year earlier. In Q3 2022, of the 63% year-over-year revenue growth, 52%, or $35 million, came from existing merchants. Our revenue from existing merchants kept rising quarter after quarter, reaching $104 million in Q3 2022, up 83% from the $57 million we posted in the same period a year earlier. Our net revenue retention for Q3 was 152%. The reason behind this is that we have practically no churn — under 1% — plus the natural expansion of our merchants in emerging markets, along with our ability to keep introducing them to additional countries and payment methods while growing share of wallet, all of which added roughly $7 million. That NRR is right in line with what we tell you each year to expect — 150-plus for all of 2022. New merchants brought in the remaining 11% of our year-over-year revenue increase, which works out to $8 million; that compares with the $9 million we recorded in Q2 of 2022 and the $12 million we saw in the same period of 2021. Because merchants typically need somewhere between 3 and 6 quarters to ramp up, we treat revenue from new merchants as just an initial indicator of what our new customers might eventually deliver. If you turn to slide 14, you'll see we remain concentrated on growing gross profit and EBITDA dollars. During the quarter we grew gross profit to $54 million, a 56% increase year-over-year and 9% higher than the prior quarter. Gross margin came in at 48%, which is about in line with the 49% margin levels we saw across the first half of 2022. That slight decrease in gross margin comes from our mix of countries and products. Cost of processing for the quarter was 2% of our TPV, the same as the prior quarter and compared with 1.8% a year before. The increase versus Q3 2021 came from business mix, in particular a larger volume of pay-ins, which cost more to process than payouts. Moving on to adjusted EBITDA, we posted $42 million in Q3 of 2022, up 58% year-over-year and 9% quarter-over-quarter. Our adjusted EBITDA margin was 37%, about in line with the 38% margin we recorded over the last four quarters; that's consistent with the 35%+ guidance we give annually for 2022. As for operating expenses this quarter, they were up 26% year-over-year, pushed higher by salaries as we continue expanding our team, with a focus on sales, expansion, and technology; beyond that, we also spent more on travel and marketing; we operate a hyper-growth business and plan to keep investing in building infrastructure and capturing long-term sustainable growth through a very disciplined and lean approach. Before handing the call back to Seba for the closing remarks, let me quickly touch on net income and liquidity. Net income reached $113 million over the trailing twelve months, compared with $70 million for the full year 2021 and $28 million in 2020. In Q3 2022, our net income was $32 million, up 64% year-over-year and 5% quarter-over-quarter. Net income for the quarter includes $2.5 million of net financial losses tied to a higher cost of hedges as we adapted to certain changes in FX regulations and faced higher interest rates. We maintain a disciplined hedging strategy that covers any relevant balance we temporarily hold in local currencies. We continue generating positive free cash flow, bringing in $121 million of owned funds over the last twelve months. That's versus $59 million for the full year 2021, excluding the PrimeiroPay acquisition, and $44 million in 2020, with strong net income to cash conversion of 107% for that twelve-month period. On top of that, our cash position keeps getting stronger, and that includes $7 million. By the close of business on September 30, 2022, our cash holdings were solid: $320 million in owned funds plus $222 million in merchant funds, alongside $7 million more. For us, a sturdy balance sheet and continuing generation of positive free cash flow remain a major competitive edge, granting us room to chase our long-term growth plan. Seba, over to you.

Thanks, Diego. So to wrap things up, what this quarter's results demonstrate are the unique advantages of our company that we keep developing, with our eyes on profitable expansion over the long haul. This comes together in three ways. First, looking at it financially, we saw strong growth in dollar terms across TPV revenue, gross profit, and adjusted EBITDA, alongside a solid NRR of 166% for the nine months of 2022. Second, strategically speaking, we have a demonstrated record of carrying out our merchant cross-sell approach and remarkable geographic growth, making the most of the enormous opportunity across Africa and Asia — all of it supported by our technology-first mindset and our focus on merchants. In the first nine months of the year, revenue from Africa and Asia totaled $48 million. Third, and most importantly, there's our lean, disciplined culture. We accomplished all of this with a team of 712 people who constantly pursue excellence. For us, our culture is a crucial element in continuing to reach our long-term ambitions. We take great pride in what we accomplished during this past quarter, and we're even more thrilled about what lies ahead; we've only just begun. We will stay humble and keep our focus on delivering the best, most complete solution for our merchants in emerging markets. A big thank you goes out to our team around the world, our customers, and our investors for sticking with us. At this point I'll hand things back to the operator so we can take questions. Thanks to everyone for listening; it was a pleasure to be here today.

Hello, everybody. Good morning. Would you mind walking us through precisely what took place regarding those FX restrictions you encountered in Argentina? How long do you expect them to last? With CPI running in triple digits, central bank rates likely hitting triple digits before long, and the government depleting its FX reserves, it simply doesn't seem like much improvement is coming. So what actually occurred? Why are you confident this won't keep happening, at least up until conditions in Argentina get better? Could you share what your revenues would have looked like without this impact? The reason I ask is that your revenue growth clearly slowed quite a bit. During Q1, your growth versus the prior quarter was 15%, and in Q2 it reached 16%, but this quarter it has come down to 11%. I want to understand what portion of that deceleration came from the circumstances in Argentina. Thank you.

Good morning, Jorge, and thank you for asking. Diego, Jacobo, I'll begin, but please jump in if you'd like to add anything. From the start of this quarter, we have been dealing with a complicated set of conditions in Argentina. If anything, our experience has been that conditions there usually become harder initially, and afterward, over the weeks or months, the local frameworks become clearer. If anything, we observe that all of it is moving in a favorable direction. Argentina is clearly a complicated market. Among all the places we operate, it stands out in that way more than any other. It isn't a major share of our business; yet Jorge, we're also aware that we work in difficult regions. One thing we offer is the ability to keep steering through markets and circumstances of this kind. Our presence there dates back to 2016; we've weathered plenty of turbulence caused by whatever inventive moves the local authorities made, and up to now we've managed to get through it. If anything, at this point we feel quite at ease, since we're seeing positive momentum across the board as we head into Q4. If Argentina hadn't grown the way it did, our revenue figure might have been 4 to 5% higher. That said, Jorge, I want to stress how genuinely pleased we are with the growth we reported today. Both our Africa and APAC operations are performing strongly, and we see that as a major driver moving forward. We still don't depend on any single region. Challenges like the one we're dealing with in Argentina are simply part of doing business in emerging markets — that's to be expected. Right now we operate in 38 — sorry, 39 — countries. So this kind of thing is only natural. What truly matters is our ability to bounce back, along with how thoroughly we grasp the local regulatory environments. Above all else, starting right when these events occur, the way we handle them and the way we guarantee that merchants keep getting served without interruption — that's something we're quite glad we've largely been able to preserve. Diego, Jacobo, if either of you has anything further to contribute, please jump in.

All right. As far as I'm concerned, by the time the quarter wrapped up, things had largely returned to normal. So, you know, adjustments were made on our end, on the banks' end, and on the central bank's end in response to these rules. A number of shifts occurred over the course of the quarter, spanning the start of July through the close of September. Broadly speaking, the initial one was unfavorable, and afterward everyone adjusted toward something more favorable. On top of that, banks need time to get used to these rules, and we encounter those difficulties just as we have on many occasions. We enter Q4 positioned far more strongly and expanding from that point.

Thank you. It's good to see this business can take a hit and shift with the times. But I'd still like a straight answer about what actually took place — I don't think the explanation landed clearly. So: what was it, precisely? In what way did it hold back your revenue growth? And what's going on at present that tells you things are back to normal? Just spell it out a little more, so all of us can grasp what the problem was. Thanks.

Of course. Jorge, usually when Argentina's government introduces a fresh FX rule, what you get is an extremely broad regulatory scheme that basically declares, "Every one of these sectors is now off-limits." From what we've seen dealing with the country's central bank, their general inclination is to keep the door open for multinationals that matter to everyday people, so those firms can still get hold of dollars. We're talking here about our merchant base, which you're quite familiar with. These services are essential for people living there. What generally unfolds is that although that first regulatory shift lands hard, you'll watch it loosen up as weeks and months pass. And then there's the point Diego brought up as well. Jorge, there's also a lag before banks get their heads around the fresh rules and figure out how to work within them. We figure the situation in Argentina will keep shifting. Sure, it's a highly unpredictable nation. It accounts for only a small slice of what we do. Being able to steer through this kind of thing is simply part of how we operate. What makes us feel more sure is that we're basing this on hard evidence. Compared with week one of Q3, week five of that quarter was 100 times stronger, so a pattern is emerging. As we head into Q4 and beyond into next year, we're quite at ease that our merchants will keep finding this workable.

Thanks.

Hello there. Good morning. I appreciate the call and for answering my questions. If I may, a couple of things. Perhaps to start, a brief follow-up regarding the Argentina matter. Is pricing something you can do for that? Possibly, given these problems, you raised the take rate, simply to attempt to determine whether there's any offset considering the difficulties you encountered in that market. Did your financial costs also take a hit from this? Your financial costs rose considerably during the quarter — I believe you said it was tied to hedging or something like that. If you could shed a bit more light on it, that would help. I have another question, though I'll pose it afterward.

Of course. Tito, thank you. Good morning, and I really appreciate the question. I'll handle the first portion, and Paco will address the second. Indeed, our pricing consistently mirrors complexity. Where countries are simpler to operate in, our take rates tend to be lower. Where you find volatility and regulatory structures that pose difficulties, our take rates are usually higher. That's simply a result of the complexity we resolve for our merchants. Correct, we generally possess the capability to charge elevated take rates in markets that are more volatile, as is true here. Jaco, would you like to add anything?

Absolutely. Tito, I appreciate that question. When it comes to financial costs that aren't tied to that specific regulatory shift, yes, some of Q3 saw us facing elevated costs of cash as a result of the regulatory change. Our view is that these are short-term adjustments we have to take on in an unusual way, you know, in order to protect our positions. As we've consistently stated, our stance on FX is quite cautious; taking corrective risk has never been something we do. That's the reason we held non-dollar amounts. If anything, over the next few quarters we anticipate those costs will return to normal levels as we move ahead.

Thanks, that's useful. Now for my follow-up, I want to ask about net revenue retention. You're still coming in above the 150-plus level you'd told us to expect. If Argentina hadn't had those problems, it's possible the figure would have been near what we saw in Q2. Looking at how things might develop going forward, growth in Asia and Africa has been really robust. Can you share anything about either the fourth quarter or even further out, into next year? Is further slowing in net revenue retention what we should anticipate? Is there anything that might push it higher from here — perhaps some seasonal pattern in Q4 — and any insight on 2023 would be appreciated. Thank you.

Absolutely. Tito, the comparison base has been really demanding, and hitting the 152 we just reported makes us incredibly proud. Our performance stays steady, we told you we'd land above 150 for this year, and we have full confidence that will happen. This is the strongest business we've ever operated. Every growth engine we have — whether you look at it strategically or commercially — is still running at maximum speed. We couldn't be more excited about what Q4 and 2023 will bring. We've listened to what The Street has suggested and we're working to offer greater visibility into our approach for 2023 — actually, I should say, into how we'll frame our 2023 guidance. Our outlook for Q4 and the years ahead is very positive. This company has never been in a stronger position. I realize I say this repeatedly, but our product lineup has never been larger. Looking at countryside merchants and our geographic diversification, all signs indicate we're heading the right way; these are the kind of long-term foundations we're glad to already have established. We feel very good about Q4, and equally good about 2023.

Thanks, Sebastián. Perhaps a single brief follow-up on that point. What exactly fuels that confidence? Could it be the expansion you're witnessing across Asia and Africa? Or perhaps Argentina recovering somewhat? You know, since a number of these worldwide online merchants are struggling in certain home markets, yet maybe there's still plenty of growth in developed markets. Just any insight into what keeps you so hopeful.

Of course. Tito, within LatAm we hold unambiguous leadership in the market, and our belief is that standing apart will keep building on itself; our approach is distinct, with the largest merchants depending on us for the most intricate operations across these nations, and we expect that to keep advancing. Clearly, Africa and APAC represent a fantastic narrative for us. At the time of our IPO, we communicated our intention to pursue this. That vision has clearly materialized. Outside LatAm, we've reached a $100 million run rate. LatAm will remain our fortress, a component of our expansion driver. Complementing that with our approach throughout additional emerging markets remains essential. On the whole, staying anything but upbeat is impossible. Our pipeline has never been stronger. Merchants depend on us across more geographies, for additional payment methods, and all these elements are what generate value; we recognize the need to address intricate challenges for our merchants; we sense we're tackling an increasing number of them; being extremely bullish is unavoidable for us. One more point, Jorge. Apologies, Tito. I'm aware several of these merchants face a highly challenging macro backdrop, yet emerging markets have demonstrated they can serve as an expansion driver for them. Our strategy fits squarely within that. If anything, you've observed numerous among them conducting layoffs. What history shows us is that whenever layoffs occur, our offerings tend to become more essential since they delegate a greater share of that work to us. Every one of those developments points the right way for us, and I want to stress how strongly optimistic we feel.

that's really helpful detail, thank you. Thelma?

Jason Kupferberg speaking, from Bank of America. Am I coming through?

Hello, Jason, good morning — we can hear you just fine.

Hello, and thanks. With Q4 already half finished, my guess is your near-term visibility must be pretty solid. So, just to establish a broad baseline, ought we to treat the guidance for the entire year on both NRR and adjusted EBITDA margins as still applicable to Q4 on its own?

Jason, our guidance has never been revised; no update happened in Q1, and none happened in Q2. This time around, we won't be doing that either. What matters and is worth passing along, I believe, is that every trend is pointing the right way. Nothing we've observed gives us short-term concern. Positive underlying growth in our business remains something we keep seeing. There's no justification for us to be unable to keep hitting those figures.

All right, that makes sense. Considering how rapidly things have taken off for you in Asia and Africa, could you discuss whether there are any meaningful differences in gross or net take rates across those regions compared with LatAm? And also, are you noticing anything when it comes to your merchant clients more often establishing local legal entities so that cross-border transactions become domestic ones? Thanks.

Absolutely. Jaco, would you like to handle that?

Okay. Jason, hi there. Hello. We really appreciate that question. We feel extremely good about the progress we've been making in Africa and Asia. Those two markets have turned into highly important ones for our business. When it comes to net take rates, it remains premature to pin that down, since it depends on the payment mix and on which nations merchants will be entering. If anything, we're seeing merchants place growing trust in our service across both geographies, and we don't observe them striking out on their own with a local entity. The trend is quite the reverse — when entering these two complicated regions, they would rather do so alongside us as partners. We stay very, very hopeful about the strides we've been taking into those two new geographies for us. That has been showing up in the revenues we're reporting this quarter from those two geographies. One more point to mention: we don't favor any particular payment method or type of service for our merchants; it makes no difference to us whether they're local to local or cross-border, since we can deliver both kinds of services to them. That, if anything, gives us the opportunity to extend merchants' products with us into additional geographies; that's why the majority of merchants never leave us.