After the scandal and fall, Uruguayan unicorn dLocal announced the first quarter results: how did it go?

The financial results report indicated that the Uruguayan company obtained profits of US$ 35.5 million, 35% more than in the first quarter of 2022 when the profitability had been US$ 26.3 million. The result was also positive in comparison with the last quarter of last year when profitability had been US$ 19.4 million.

The company stated that The profit generated in the first quarter was mainly driven by a reduction in the financial cost of hedges due to less exposure and higher interest income. as the position of cash and cash equivalents continued to increase.

The income obtained was US$137.3 million and grew 57% compared to the same quarter of 2022 when it had been US$87.5 million.

Gross profit was US$ 61.8 million with a year-on-year increase of 42%.

The report noted that during the first quarter of 2023 dLocal invested US$36.9 million in the share repurchase program.

This Thursday the dLocal share was trading at US$ 14.17 with a rise of 1.14%.

change of course

The company thus reversed a bad closing of 2022 with an 18% drop in its profits in the fourth quarter, compared to the same period a year ago. The poor result was due to an increase in operating expenses and costs linked to a negative report prepared by the firm Muddy Waters Research.

Stocks plummeted 51% on the New York Stock Exchange up to US$ 10.5 after the report was released.

In one passage, Muddy Waters said that an investigation led to the belief that dLocal was “likely a fraud.”

According to the company, dLocal had “repeated disclosures about its total volume of payments and accounts receivable that flatly contradict each other. There is also a contradictory discrepancy between the accounts payable and accounts receivable of two key subsidiaries.

“While we investigate, we found a series of lies the company has told, along with accounts it has altered to corroborate the lies. This series of lies involved disguising the timing of an option exercise and the source of funding for that option exercise with insider information. Absent the most blatant level of incompetence, these account alterations should point to fraud,” the Muddy Waters report added.

Following that report, dLocal released a public statement.

“Markets commented today (for this Wednesday) on a short sellers report released by Muddy Waters Capital. EThe report contains numerous inaccurate statements, unsubstantiated claims and speculation”, he exposed.

“Short seller reports are often designed to drive the stock price down to serve the interests of the short seller to the detriment of the company’s shareholders. We caution shareholders not to make investment decisions based on this report. dLocal will refute the allegations in the appropriate forum in due course,” she said.