Uruguay’s dLocal, the Nasdaq-listed payments platform that connects global merchants to emerging-market consumers, has quietly entered Qatar, Kuwait and Oman, bringing its country count to more than 60. The move into the Gulf, disclosed alongside first-quarter 2026 results on 14 May, marks the latest chapter in a decade-long expansion story — and a deliberate bet that the Middle East can offer ballast against the unpredictable swings of its African portfolio.
The headline numbers were arresting. Total payment volume (TPV) surpassed $14 billion for the first time, rising 73% year-on-year, while revenue climbed 19% to $216 million. Yet buried in the regional breakdown was a narrative that has become familiar to dLocal watchers: African markets are simultaneously powering growth and injecting volatility.
Africa and Asia (A&A) — the segment in which almost all of dLocal’s African business now sits — delivered revenue of $73.4 million, up 36% year-on-year, while gross profit reached $34.0 million, a 34% jump. Those top-line figures, however, obscure a sharp reshuffling of country-level fortunes. Nigeria and Mozambique were singled out as notable contributors to the quarter’s volume growth, while Egypt — until recently one of the company’s brightest African stars — has been unceremoniously dropped from standalone reporting.
As of the first quarter of 2026, Egypt no longer meets the threshold of 10% of total revenue, having fallen to about 5% of the full-year 2025 top line. In the Q1 2026 gross-profit bridge, management flagged “lower FX spreads in Egypt” as a drag on the overall net take rate, the second consecutive quarter in which the North African nation has acted as a headwind.
This reversal of fortune is stark. In the third quarter of 2024, Egypt’s revenue surged 318% year-on-year to $18.6 million, compensating handsomely for the collapse of dLocal’s Nigerian business after the naira’s devaluation. Even in Q1 2025, Egyptian revenue grew 58%. The slide began in the second quarter of 2025, when the company attributed a slowdown in its Africa & Asia segment to “partial volume loss due to a large merchant implementing redundancies in the market,” combined with lower foreign-exchange spreads following a currency devaluation. A single large merchant — dLocal has never identified it publicly — reined in operations, and the effect ricocheted through the country’s contribution.
“Egypt’s journey encapsulates the promise and peril of emerging-market payments,” said an analyst who follows the company, speaking on condition of anonymity. “One day it’s your fastest-growing territory; the next, a currency adjustment and a key merchant’s risk appetite change, and it’s back to a mid-single-digit percentage of revenue.”
Africa’s new hotspots
While Egypt fades, other African markets are stepping up. Mozambique earned a shout-out in the earnings release as a driver of gross-profit expansion alongside Nigeria and Vietnam. South Africa, too, has evolved from a source of cost pressure to a solid contributor. In mid-2025, the company had flagged rising processing costs there, linked to rand volatility and regulatory expenses. By the second half of that year, the picture had brightened, and the Q1 2026 monetisation bridge noted only a mild seasonal headwind from lower volumes in South Africa, rather than margin erosion.
The South African story has been partly underpinned by the remarkable inroads made by Chinese ultra-low-cost e-commerce platforms. Temu and Shein together captured an estimated 3.6% of the country’s clothing, textile, footwear and leather market in 2024, amounting to 7.3 billion rand (roughly $405 million) in sales. dLocal confirmed it finalised a partnership with Temu in March 2025, and while the company does not disclose merchant-level volumes, the tie-up is widely seen as a tailwind for digital payment flows in the region.
That “Temu effect” is a reminder that Africa’s payment volumes can be swayed by a handful of platform partners. dLocal’s own disclosures show that its top 10 merchants accounted for 61% of revenue in Q1 2026, unchanged from the prior quarter. Net revenue retention stood at 152%, indicating that once onboarded, merchants tend to expand their spending with dLocal by adding countries, payment methods or products. But concentration risk remains acute: a change of strategy at just one large client can reshape a country’s entire trajectory.
The Middle East hedge
It is against this backdrop of African whiplash that dLocal’s push into the Gulf should be read. The company now lists Qatar, Kuwait and Oman among its operational markets, adding to an existing presence in the wider Middle East and North Africa region, where it already processes payments in markets such as Saudi Arabia, the United Arab Emirates, and — of course — Egypt. dLocal holds 38 licences and registrations across 26 markets, with a further 16 applications in process, many of them presumably linked to its Gulf expansion.
The rationale is clear. Gulf economies offer high smartphone penetration, growing e-commerce sectors, and — critically — a larger share of card-based transactions, which often carry more attractive unit economics than some mobile-money or bank-transfer flows in sub-Saharan Africa. Saudi Arabia, for instance, is dominated by the local Mada card scheme, which accounts for roughly 90% of cards issued; dLocal’s ability to process local card rails gives it a conversion-rate uplift of up to 20 percentage points compared with international-only acquiring, according to the company’s own testing.
“Adding Qatar, Kuwait and Oman is not just about flag-planting,” said a person familiar with the firm’s strategy. “It’s about building a broader, more balanced portfolio so that no single region — and no single currency — can throw the whole machine off.”
That philosophy was already on display in dLocal’s treasury operations. After being stung by Argentina’s peso devaluation in 2023–24, the company slashed its exposure to Argentine sovereign bonds by more than 80%, shifting funds into U.S. Treasuries. In Africa, it made an even bolder move, agreeing to acquire Nairobi-based AZA Finance, a B2B fintech specialising in cross-border foreign exchange and treasury services, for $150 million. The deal, announced in 2025 and now abandoned, was designed to strengthen dLocal’s African infrastructure, particularly its ability to manage currency volatility across multiple markets without taking speculative positions.
A decade of compounding — and coping
This year, dLocal marks its tenth anniversary and the fifth since its Nasdaq IPO. In a letter to shareholders, chief executive Pedro Arnt reflected on the “consistent, compounding growth” that has seen TPV swell from $100 million in 2016 to a trailing-twelve-month figure of $47 billion. “We now process more in a single day than we did in our entire first year of operations,” Arnt wrote. “The strategic model never changed. One API. Deep local infrastructure. Continuous expansion.”
That infrastructure now reaches approximately 70% of the world’s population, Arnt claimed, supporting more than 760 enterprise merchants and over 1,000 payment methods. In markets such as Kenya, where mobile money M-Pesa accounts for a large slice of digital payments, dLocal’s integrations have helped an internet-services merchant see more than half of its paying users come in as net-new customers. In South Africa, the buy-now-pay-later offering drives a similar proportion of first-time buyers for an e-commerce platform.
Yet the rollout of such “local-first” capabilities is expensive. Operating expenses in Q1 2026 hit $65.9 million, up 58% year-on-year. Excluding a $4.4 million prior-year tax charge and $3.8 million of other transient items, underlying OPEX rose roughly 9% sequentially. That pressure pushed the operating-profit-to-gross-profit ratio down to 44% (48% on a normalised basis), from 54% a year earlier. Management told investors to expect operating leverage to improve in the second half of 2026, citing the end of the investment cycle, headcount reductions from automation, and lower share-based payment expenses.
Risks on the radar
For all the talk of portfolio balance, dLocal’s latest guidance remains hedged with caveats. The company reaffirmed its full-year outlook — TPV growth of 50–60%, gross profit growth of 22.5–27.5%, and operating profit growth of 27.5–32.5% — but listed a formidable array of risks: Brazil’s evolving tax environment, Argentine foreign-exchange instability, tariff sensitivity in Mexico, electoral uncertainty across Latin America, and “broader FX risk across our emerging-market footprint.”
Africa is never far from that list. The Q1 2026 release highlighted that the monetisation rate — gross profit as a percentage of TPV — slipped to 0.84%, from 1.05% a year earlier, as larger merchants, lower-margin local payment methods, and currency effects weighed on the take rate. The company’s adjusted free cash flow dropped to $15 million, a fraction of the $65 million generated in the fourth quarter of 2025, due to temporary working-capital swings, including an $11 million build-up of tax credits and a $24 million increase in receivables from “advancement operations.” Management expects those to normalise, but the quarter served as a reminder that cash generation can be lumpy when a company’s balance sheet is stretched across dozens of volatile jurisdictions.
The road ahead
dLocal’s Middle Eastern push and its African rollercoaster are two sides of the same coin. The company is chasing the next wave of digital consumers, betting that its thick layer of local licences, payment methods and banking relationships creates a moat that generic international acquirers cannot cross. Africa, with its youthful population and fast-growing e-commerce segment, remains central to that thesis — but the path is bumpy, as the Egyptian reversal and the earlier Nigerian implosion demonstrate.
By layering in Gulf markets, dLocal is seeking a smoother ride without sacrificing the high-growth, high-margin potential that drew it to emerging markets in the first place. Whether the strategy works will depend on execution: gaining meaningful market share in new countries while managing the legacy volatility that its existing African base still generates.
For now, the Uruguayan unicorn seems content to surf the undulations, deploying capital, infrastructure and partnerships to stay upright. As Arnt’s shareholder letter put it: “The combination of strong base business momentum, a product roadmap that is gaining traction, and secular tailwinds across our markets … gives us confidence that the next decade can be as impressive as the last.” Investors who have lived through the African swings will be hoping the Middle East provides a little more cruise control.