6-K
dLocal Ltd (DLO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OFFOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2021
Commission File Number: 001-40451
DLocal Limited
(Exactname of registrant as specified in its charter)
Dr. LuisBonavita 1294
Montevideo
Uruguay 11300
+1 (424) 392-7437
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ☐ No ☒
TABLE OF CONTENTS
EXHIBIT
| 99.1 | Press release dated November 16, 2021 - DLocal Limited Reports 2021 Third Quarter Financial Results |
|---|---|
| 99.2 | DLocal Limited Unaudited Condensed Consolidated Interim Financial Statements as of September 30, 2021 and for the three and nine-month period ended September 30, 2021 and 2020 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DLocal Limited | |
|---|---|
| By: | /s/ Diego Cabrera Canay |
| Name: Diego Cabrera Canay | |
| Title: Chief Financial Officer |
Date: November 17, 2021
EX-99.1
Exhibit 99.1
DLocal Limited Reports Third Quarter 2021 Financial Results
US$1.8 billion Total Payment Volume, up 217% year-over-year
Revenues of US$68.6 million, up 123% year-over-year
38% Adj EBITDA Margin, down 228 bps year-over-year
dLocal reports in US dollars and in accordance with IFRS as issued by the IASB
Montevideo, Uruguay November 16, 2021 (GLOBE NEWSWIRE) — DLocal Limited (“dLocal”, “we”, “us”, and “our”) (NASDAQ:DLO), a technology- first payments platform today announced its financial results for the third quarter ended September 30, 2021.
“We continue to see strong growth across multiple verticals as we see local economies continue to bounce back and global merchants prioritize their efforts in emerging markets. We continue to execute on our strategy to make the complex simple for our merchants. We continue to add new product capabilities on our platform that enhance our merchants’ ability to benefit from higher conversion. We continue to add new countries to our infrastructure network while continuing to add more payment methods and partners in markets in Latin America, Asia and Africa”, said Sebastian Kanovich.
Third Quarter 2021 Financial Highlights
| • | Total Payment Volume (“TPV”) reached US$1.8 billion in the quarter, representing 217%<br>year-over-year growth compared to US$572 million in the third quarter of 2020 and 24% growth compared to US$1.5 billion in the second quarter of 2021. |
|---|---|
| • | Revenues in the third quarter of 2021 amounted to US$68.6 million, representing 123% year-over-year growth<br>compared to US$30.9 million in the third quarter of 2020 and 16% growth compared to $59.0 million in the second quarter of 2021. |
| --- | --- |
| • | Adjusted EBITDA was US$26.3 million in the third quarter of 2021 compared to US$12.5 million in the<br>third quarter of 2020 and US$25.9 million in the second quarter of 2021. |
| --- | --- |
| • | Adjusted EBITDA Margin was 38% in the third quarter of 2021 compared to 41% in the third quarter of 2020 and 44%<br>in the second quarter of 2021. |
| --- | --- |
| • | Profit for the third quarter of 2021 was US$19.7 million, or US$0.06 per diluted share, compared with profit<br>of US$8.6 million, or US$0.03 per diluted share, for the third quarter of 2020 and with profit of US$17.7 million, or US$0.06 per diluted share, for the second quarter of 2021. |
| --- | --- |
| • | Profit for the third quarter of 2021 includes one-off expenses of<br>US$0.9 million mainly related to secondary offering expenses. |
| --- | --- |
| • | As of September 30, 2021, dLocal had US$293.1 million in cash, cash equivalents and marketable<br>securities, compared with US$266.0 million as of June 30, 2021. The increase of US$27.1 reflects an increase of US$16.3 million in our funds and an increase of US$10.8 million in funds due to our merchants with respect to the<br>second quarter of 2021. |
| --- | --- |
The following table summarizes our key performance metrics:
| Three months ended | Nine months ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | ||||||||
| (in millions of US except for %) | |||||||||||
| Key Performance Metrics | |||||||||||
| TPV | 572 | 4,193 | 1,308 | ||||||||
| TPV growth YoY | % | 65 | % | 221 | % | 47 | % | ||||
| Revenue | 30.9 | 167.9 | 69.5 | ||||||||
| Revenue growth YoY | % | 96 | % | 142 | % | 85 | % | ||||
| Adj. EBITDA | 12.5 | 70.1 | 28.3 | ||||||||
| Adj. EBITDA Margin | % | 41 | % | 42 | % | 41 | % |
All values are in US Dollars.
Earnings per share:
We calculate basic earnings per share by dividing the profit attributable to equity holders by the weighted average number of common shares issued and outstanding during the nine-months and three-months periods ended September 30, 2021 and 2020.
Our diluted earnings per share is calculated by dividing the profit attributable to equity holders of dLocal by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all dilutive potential common shares into common shares.
The next table presents the information used as base for such calculation
| For the three-month period endedSeptember 30 | For the nine-month period endedSeptember 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Profit attributable to equity shareholders (U.S. Dollars) | 19,663,000 | 8,622,000 | 54,291,000 | 16,586,000 | ||||
| Weighted average number of common shares | 293,558,997 | 268,598,000 | 284,456,779 | 268,598,000 | ||||
| Adjustments for calculation of diluted earnings per share | 19,646,000 | 12,964,000 | 19,609,500 | 13,544,500 | ||||
| Weighted average number of ordinary shares for calculating diluted earnings per share | 313,204,997 | 281,562,000 | 304,066,279 | 282,142,500 | ||||
| Basic earnings per share | 0.07 | 0.03 | 0.19 | 0.06 | ||||
| Diluted earnings per share | 0.06 | 0.03 | 0.18 | 0.06 |
Third Quarter 2021 Business Highlights
| • | Our quarter over quarter TPVgrowth is attributable to the performance and continued growth of our enterprise<br>merchants across most verticals, particularly in ride hailing, streaming, advertising, SAAS (“software as a service”) and retail, while other verticals such as financial services remained relatively stable. |
|---|---|
| • | Revenue from Existing Merchants increased by US$26.2 million in the third quarter of 2021. The net revenue<br>retention rate, or NRR, in the third quarter of 2021 reached 185%, compared with 159%^1^in the fiscal year 2020. |
| --- | --- |
| • | Revenues from New Merchants reached US$11.6 million in the third quarter of 2021 compared to<br>US$9.5 million in the fiscal year 2020. |
| --- | --- |
| • | dLocal continued to focus on its expansion efforts and added Thailand and El Salvador to its geographic network<br>during the quarter, bringing the total number of countries in which dLocal makes its services available to 32. |
| --- | --- |
| • | On average, Enterprise Global Merchants used dLocal’s platform in more than seven different countries and 64<br>payment methods in the third quarter of 2021, compared to nearly six different countries and 44 payment methods in 2020 and nearly seven different countries and 62 payment methods in the second quarter of 2021. |
| --- | --- |
| ^1^ | Including the effect in 2019 of a warrant with a merchant (valued at US$4.3 million, which was a<br>contra-revenue for such year), the NRR would have been 171%. |
| --- | --- |
Conference Call and Webcast
dLocal’s management team will host a conference call and audio webcast on November 16, 2021 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (888) 705-0197/ (409) 981-0764 (Conference ID – 4073836 –) and requesting inclusion in the call for dLocal.
The live conference call can be accessed via audio webcast at the investor relations section of dLocal’s website, at https://investor.dlocal.com/. An archive of the webcast will be available for a year following the conclusion of the conference call. The investor presentation will also be filed on EDGAR at www.sec.gov.
About dLocal
dLocal powers local payments in emerging markets, connecting global enterprise merchants with billions of emerging market consumers in over 30 countries across APAC, the Middle East, Latin America, and Africa. Through the “One dLocal” platform (one direct API, one platform, and one contract), global companies can accept payments, send pay-outs and settle funds globally without the need to manage separate pay-in and payout processors, set up numerous local entities, and integrate multiple acquirers and payment methods in each market.
Definition of Selected Operational Metrics
“API” means application programming interface, which is a general term for programming techniques that are available for software developers when they integrate with a particular service or application. In the payments industry, APIs are usually provided by any party participating in the money flow (such as payment gateways, processors, service providers) to facilitate the money transfer process.
“Enterprise Global Merchants” means merchants with at least US$6 million of annual TPV used in our platform.
“Local payment methods” refers to any payment method that is processed in the country where the end user of the merchant sending or receiving payments is located, which include credit and debit cards, cash payments, bank transfers, mobile money, and digital wallets.
“NRR” means net revenue retention rate, which is the U.S. dollar-based measure of retention and growth of our merchants. We calculate the NRR of a period by dividing the current period revenue by the prior period revenue. The prior period revenue is the revenue billed by us to all of our merchant customers in the corresponding period for the prior fiscal year. The current period revenue is the revenue billed by us in the corresponding period for the current fiscal year to the same merchant customers included in the calculation of the prior period revenue. Current period revenue includes any upsells and cross-sells of products, geographies, and payment methods to such merchant customers, and is net of any contractions or attrition, but excludes revenue from new customers on-boarded during the last 12 months.
“Pay-in” means a payment transaction whereby dLocal’s merchant customers receive payment from their customers.
“Pay-out” means a payment transaction whereby dLocal disburses money in local currency to the business partners or customers of dLocal’s merchant customers.
***“Revenue from New Merchants”:***means the revenue billed by us to merchant customers that we did not bill revenues in the same quarter (or period) of the prior year.
“Revenue from Existing Merchants”: means the revenue billed by us in the last twelve months to the merchant customers that we billed revenue in the same quarter (or period) of the prior year.
Special Note Regarding Adjusted EBITDA and Adjusted EBITDA Margin
dLocal has only one operating segment. dLocal measures its operating segment’s performance by Revenues, Adjusted EBITDA and Adjusted EBITDAMargin, and uses these metrics to make decisions about allocating resources.
Adjusted EBITDA as used by dLocal is defined as the profit from operations before financing and taxation for the year or period, as applicable, before depreciation of property, plant and equipment, amortization of right-of-use assets and intangible assets, and further excluding the changes in fair value of financial assets and derivative instruments carried at fair value through profit or loss, impairment gains/(losses) on financial assets, transaction costs, share-based payment non-cash charges, secondary offering expenses, transaction expenses and inflation adjustment. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenues.
Although Adjusted EBITDA and Adjusted EBITDA Margin may be commonly viewed as non-IFRS measures in other contexts, pursuant to IFRS 8, (“Operating Segments”), Adjusted EBITDA and Adjusted EBITDA Margin are treated by dLocal as IFRS measures based on the manner in which dLocal utilizes these measures. Nevertheless, dLocal’s Adjusted EBITDA and Adjusted EBITDA Margin metrics should not be viewed in isolation or as a substitute for net income for the periods presented under IFRS. dLocal also believes that its Adjusted EBITDA and Adjusted EBITDA Margin metrics are useful metrics used by analysts and investors, although these measures are not explicitly defined under IFRS. Additionally, the way dLocal calculates operating segment’s performance measures may be different from the calculations used by other entities, including competitors, and therefore, dLocal’s performance measures may not be comparable to those of other entities.
The table below presents a reconciliation of dLocal’s Adjusted EBITDA and Adjusted EBITDA Margin to net income:
| Three-months endedSeptember 30 | Nine-months endedSeptember 30 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | ||||||||
| (in thousands of US except for %) | |||||||||||
| Profit for the period | **** | **** | 8,622 | **** | **** | 54,304 | **** | **** | 16,586 | **** | |
| Income tax expense | 932 | 5,533 | 2,231 | ||||||||
| Depreciation and amortization | 282 | 3,240 | 744 | ||||||||
| Secondary offering expenses | — | 4,442 | — | ||||||||
| Transaction costs | — | 665 | — | ||||||||
| Share-based payment non-cash charges | 106 | 5,354 | 7,039 | ||||||||
| Other operating loss / (gain) | 2,760 | (2,896 | ) | 2,831 | |||||||
| Other charges, net | ) | (169 | ) | (557 | ) | (1,181 | ) | ||||
| Adjusted EBITDA | **** | **** | 12,533 | **** | **** | 70,085 | **** | **** | 28,250 | **** | |
| Revenues | **** | **** | 30,850 | **** | **** | 167,863 | **** | **** | 69,490 | **** | |
| Adjusted EBITDA | **** | **** | 12,533 | **** | **** | 70,085 | **** | **** | 28,250 | **** | |
| Adjusted EBITDA Margin | % | **** | 40.6 | % | **** | 41.8 | % | **** | 40.7 | % |
All values are in US Dollars.
This press release does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, “Interim Financial Reporting” nor a financial statement as defined by International Accounting Standards 1 “Presentation of Financial Statements”. The financial information in this press release has not been audited.
Forward Looking Statements
This press release contains certain forward-looking statements. These forward-looking statements convey dLocal’s current expectations or forecasts of future events. Forward-looking statements regarding dLocal involve known and unknown risks, uncertainties and other factors that may cause dLocal’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the “Risk Factors,” “Forward-Looking Statements” and “Cautionary Note Regarding Forward-Looking Statements” sections of dLocal’s most recent registration statement on Form F-1 and certain of dLocal’s other filings with the U.S. Securities and Exchange Commission. Unless required by law, dLocal undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date hereof.
DLocal Limited
Certain interim financial information
ConsolidatedCondensed Statements of Comprehensive Income for the three month and nine month periods ended September 30, 2021 and 2020
(In thousands ofU.S. dollars, except per share amounts, unaudited)
| Nine-months ended<br><br><br>September 30 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | 2020 | |||||||||
| Continuing operations | |||||||||||
| Revenues | 68,646 | 30,850 | 167,863 | 69,490 | |||||||
| Cost of services | (34,202 | ) | (13,969 | ) | (76,361 | ) | (30.084 | ) | |||
| Gross profit | 34,444 | **** | **** | 16,881 | **** | **** | 91,502 | **** | **** | 39,406 | **** |
| Technology and development expenses | (1,116 | ) | (528 | ) | (2,232 | ) | (1,255 | ) | |||
| Sales and marketing expenses | (1,255 | ) | (739 | ) | (3,424 | ) | (2,022 | ) | |||
| General and administrative expenses | (10,887 | ) | (3,469 | ) | (30,080 | ) | (15,662 | ) | |||
| Impairment loss / (gain) on financial assets | 159 | (45 | ) | (8 | ) | 853 | |||||
| Other operating gain/(loss) | 224 | (2,760 | ) | 3,514 | (2,831 | ) | |||||
| Operating profit | 21,569 | **** | **** | 9,340 | **** | **** | 59,272 | **** | **** | 18,489 | **** |
| Finance income | 1,089 | 219 | 1,273 | 354 | |||||||
| Finance costs | (275 | ) | (14 | ) | (511 | ) | (60 | ) | |||
| Inflation adjustment | (156 | ) | 9 | (197 | ) | 34 | |||||
| Other results | 658 | **** | **** | 214 | **** | **** | 565 | **** | **** | 328 | **** |
| Profit before income tax | 22,227 | **** | **** | 9,554 | **** | **** | 59,837 | **** | **** | 18,817 | **** |
| Income tax expense | (2,558 | ) | (932 | ) | (5,533 | ) | (2,231 | ) | |||
| Profit for the period | 19,669 | **** | **** | 8,622 | **** | **** | 54,304 | **** | **** | 16,586 | **** |
| Profit attributable to: | |||||||||||
| Owners of the Group | 19,663 | 8,622 | 54,291 | 16,586 | |||||||
| Non-controlling interest | 6 | — | 13 | — | |||||||
| Profit for the period | 19,669 | **** | **** | 8,622 | **** | **** | 54,304 | **** | **** | 16,586 | **** |
| Earnings per share (in ) | |||||||||||
| Basic Earnings per share | 0.07 | 0.03 | 0.19 | 0.06 | |||||||
| Diluted Earnings per share | 0.06 | 0.03 | 0.18 | 0.06 | |||||||
| Other comprehensive Income | |||||||||||
| Items that may be reclassified to profit or loss: | |||||||||||
| Exchange difference on translation on foreign operations | (391 | ) | 249 | 477 | (555 | ) | |||||
| (391 | ) | 249 | 477 | (555 | ) | ||||||
| Total comprehensive income for the period | |||||||||||
| Owners of the Group | 19,272 | 8,869 | 54,759 | 16,031 | |||||||
| Non-controlling interest | 6 | 2 | 22 | — | |||||||
| 8,871 | 54,781 | 16,031 |
All values are in US Dollars.
DLocal Limited
Certain interim financial information
ConsolidatedCondensed Statements of Financial Position as of September 30, 2021 and December 31, 2020
(In thousands of U.S. dollars, except per shareamounts, unaudited)
| September 30, 2021 | December 31, 2020 | ||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current Assets | |||||
| Cash and cash equivalents | 293,055 | 111,733 | |||
| Financial assets at fair value through profit or loss | 1,066 | 8,319 | |||
| Trade and other receivables | 167,600 | 72,785 | |||
| Other assets | 1,825 | 2,017 | |||
| Total Current Assets | **** | 463,546 | **** | 194,854 | **** |
| Non-Current Assets | |||||
| Deferred tax assets | 252 | 216 | |||
| Property, plant and equipment | 2,243 | 913 | |||
| Right-of-use<br>assets | 4,030 | 188 | |||
| Intangible assets | 45,799 | 4,153 | |||
| Other assets | — | 143 | |||
| Total Non-Current Assets | **** | 52,324 | **** | 5,613 | **** |
| TOTAL ASSETS | **** | 515,870 | **** | 200,467 | **** |
| LIABILITIES | |||||
| Current Liabilities | |||||
| Trade and other payables | 244,476 | 142,865 | |||
| Lease liabilities | 272 | 201 | |||
| Tax liabilities | 8,742 | 7,788 | |||
| Derivative financial instruments | — | 2,896 | |||
| Provisions | 2,409 | 1,393 | |||
| Contingent considerations liability | 665 | — | |||
| Total Current Liabilities | **** | 256,564 | **** | 155,143 | **** |
| Non-Current Liabilities | |||||
| Deferred tax liabilities | 655 | 259 | |||
| Lease liabilities | 3,760 | 17 | |||
| Total Non-Current Liabilities | **** | 4,415 | **** | 276 | **** |
| TOTAL LIABILITIES | **** | 260,979 | **** | 155,419 | **** |
| EQUITY | |||||
| Share Capital | 590 | 602 | |||
| Share Premium | 157,151 | — | |||
| Capital Reserve | 10,505 | 12,582 | |||
| Other Reserves | 423 | 119 | |||
| Retained earnings | 86,204 | 31,749 | |||
| Total Equity Attributable to owners of the Group | **** | 254,873 | **** | 45,052 | **** |
| Non-controlling interest | 18 | (4 | ) | ||
| TOTAL EQUITY | **** | 254,891 | **** | 45,048 | **** |
dLocal was incorporated on February 10, 2021, as a Cayman Islands exempted company with limitedliability, duly registered with the Cayman Islands Registrar of Companies. The contribution of dLocal Group Limited (a limited liability company incorporated in Malta, the former holding entity or “dLocal Malta”) shares to dLocal was theCayman Islands company has been finalized as of April 14, 2021. Until the contribution of dLocal Malta shares to it, dLocal had not commenced operations, consequently the historical information previous to that date presented in herecorresponds to dLocal Malta, our predecessor. This reorganization was done, among other things, to facilitate the initial public offering of the Group. dLocal had no prior assets, holdings or operations.
Other disclosures:
Pursuant to the terms of certain lock-up agreements entered into by dLocal’s directors and executive officers, the selling shareholders, and certain other shareholders with the underwriters of dLocal’s initial public offering, the lock-up restrictions will be released immediately prior to the opening of trading on November 18, 2021 with respect to 70% of the common shares owned immediately prior to the initial public offering by each of the selling shareholders and dLocal’s directors, executive officers, and certain other shareholders; provided that dLocal’s directors and the selling shareholders that participated in dLocal’s secondary offering of common shares on October 20, 2021 remain subject to lock-up restrictions for 90 days from the date thereof.
Investor Relations Contact:
investor@dlocal.com
MediaContact:
marketing@dlocal.com
EX-99.2
Exhibit 99.2
DLocal Limited
Unaudited Condensed ConsolidatedInterim Financial Statements as of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
DLocal Limited
Consolidated Condensed Interim Statements of Comprehensive Income
For the nine-month and three-month periods ended September 30, 2021 and 2020
(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)
| Nine-months ended<br><br><br>September 30 | Three-months ended<br><br><br>September 30 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| Continuing operations | |||||||||||||
| Revenues | 6 | 167,863 | 69,490 | 68,646 | 30,850 | ||||||||
| Cost of services | 6 | (76,361 | ) | (30.084 | ) | (34,202 | ) | (13,969 | ) | ||||
| Gross profit | **** | 91,502 | **** | **** | 39,406 | **** | **** | 34,444 | **** | **** | 16,881 | **** | |
| Technology and development expenses | 7 | (2,232 | ) | (1,255 | ) | (1,116 | ) | (528 | ) | ||||
| Sales and marketing expenses | 8 | (3,424 | ) | (2,022 | ) | (1,255 | ) | (739 | ) | ||||
| General and administrative expenses | 8 | (30,080 | ) | (15,662 | ) | (10,887 | ) | (3,469 | ) | ||||
| Impairment (loss)/gain on financial assets | 15 | (8 | ) | 853 | 159 | (45 | ) | ||||||
| Other operating gain/(loss) | 3,514 | (2,831 | ) | 224 | (2,760 | ) | |||||||
| Operating profit | **** | 59,272 | **** | **** | 18,489 | **** | **** | 21,569 | **** | **** | 9,340 | **** | |
| Finance income | 1,273 | 354 | 1,089 | 219 | |||||||||
| Finance costs | (511 | ) | (60 | ) | (275 | ) | (14 | ) | |||||
| Inflation adjustment | (197 | ) | 34 | (156 | ) | 9 | |||||||
| Other results | **** | 565 | **** | **** | 328 | **** | **** | 658 | **** | **** | 214 | **** | |
| Profit before income tax | **** | 59,837 | **** | **** | 18,817 | **** | **** | 22,227 | **** | **** | 9,554 | **** | |
| Income tax expense | 11 | (5,533 | ) | (2,231 | ) | (2,558 | ) | (932 | ) | ||||
| Profit for the period | **** | 54,304 | **** | **** | 16,586 | **** | **** | 19,669 | **** | **** | 8,622 | **** | |
| Profit attributable to: | |||||||||||||
| Owners of the Group | 54,291 | 16,586 | 19,663 | 8,622 | |||||||||
| Non-controlling interest | 13 | — | 6 | — | |||||||||
| Profit for the period | **** | 54,304 | **** | **** | 16,586 | **** | **** | 19,669 | **** | **** | 8,622 | **** | |
| Earnings per share (in ) | |||||||||||||
| Basic Earnings per share | 12 | 0.19 | 0.06 | 0.07 | 0.03 | ||||||||
| Diluted Earnings per share | 12 | 0.18 | 0.06 | 0.06 | 0.03 | ||||||||
| Other comprehensive Income | |||||||||||||
| Items that may be reclassified to profit or loss: | |||||||||||||
| Exchange difference on translation on foreign operations | 477 | (555 | ) | (391 | ) | 249 | |||||||
| Other comprehensive income / (expense) for the period, net of tax | **** | 477 | **** | **** | (555 | ) | **** | (391 | ) | **** | 249 | **** | |
| Total comprehensive income for the period | |||||||||||||
| Owners of the Group | 54,759 | 16,031 | 19,272 | 8,869 | |||||||||
| Non-controlling interest | 22 | — | 6 | 2 | |||||||||
| 54,781 | 16,031 | 19,278 | 8,871 |
All values are in US Dollars.
The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements.
F-1
DLocal Limited
Consolidated Condensed Interim Statements of Financial Position
As of September 30, 2021 and December 31, 2020
(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)
| Notes | September 30, 2021 | December 31, 2020 | ||||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Current Assets | ||||||
| Cash and cash equivalents | 14 | 293,055 | 111,733 | |||
| Financial assets at fair value through profit or loss | 1,066 | 8,319 | ||||
| Trade and other receivables | 15 | 167,600 | 72,785 | |||
| Other assets | 16 | 1,825 | 2,017 | |||
| Total Current Assets | **** | 463,546 | **** | 194,854 | **** | |
| Non-Current Assets | ||||||
| Deferred tax assets | 252 | 216 | ||||
| Property, plant and equipment | 2,243 | 913 | ||||
| Right-of-use<br>assets | 4,030 | 188 | ||||
| Intangible assets | 17 | 45,799 | 4,153 | |||
| Other assets | 16 | — | 143 | |||
| Total Non-Current Assets | **** | 52,324 | **** | 5,613 | **** | |
| TOTAL ASSETS | **** | 515,870 | **** | 200,467 | **** | |
| LIABILITIES | ||||||
| Current Liabilities | ||||||
| Trade and other payables | 18 | 244,476 | 142,865 | |||
| Lease liabilities | 272 | 201 | ||||
| Tax liabilities | 19 | 8,742 | 7,788 | |||
| Derivative financial instruments | 20 | — | 2,896 | |||
| Provisions | 21 | 2,409 | 1,393 | |||
| Contingent considerations liability | 665 | — | ||||
| Total Current Liabilities | **** | 256,564 | **** | 155,143 | **** | |
| Non-Current Liabilities | ||||||
| Deferred tax liabilities | 655 | 259 | ||||
| Lease liabilities | 3,760 | 17 | ||||
| Total Non-Current Liabilities | **** | 4,415 | **** | 276 | **** | |
| TOTAL LIABILITIES | **** | 260,979 | **** | 155,419 | **** | |
| EQUITY | ||||||
| Share Capital | 12 | 590 | 602 | |||
| Share Premium | 12 | 157,151 | — | |||
| Capital Reserve | 12 | 10,505 | 12,582 | |||
| Other Reserves | 12 | 423 | 119 | |||
| Retained earnings | 12 | 86,204 | 31,749 | |||
| Total Equity Attributable to owners of the Group | **** | 254,873 | **** | 45,052 | **** | |
| Non-controlling interest | 18 | (4 | ) | |||
| TOTAL EQUITY | **** | 254,891 | **** | 45,048 | **** |
The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements.
F-2
DLocal Limited
Consolidated Condensed Interim Statements of Changes in Equity
For the nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)
| Notes | MemberContributedCapital | ShareCapital | SharePremium | CapitalReserve | OtherReserves | RetainedEarnings | Total | Non-controllinginterest | Totalequity | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as of January 1^st^,2021 | **** | — | **** | **** | 602 | **** | **** | — | **** | 12,582 | **** | **** | 119 | **** | **** | 31,749 | **** | **** | 45,052 | **** | **** | (4 | ) | **** | 45,048 | **** | ||
| Comprehensive Income for the period | ||||||||||||||||||||||||||||
| Profit of the period | — | — | — | — | — | 54,291 | **** | 54,291 | **** | 13 | **** | 54,304 | **** | |||||||||||||||
| Exchange difference on translation on foreign operations | — | — | — | — | 304 | 164 | **** | 468 | **** | 9 | **** | 477 | **** | |||||||||||||||
| Total Comprehensive Income for the period | **** | — | **** | **** | — | **** | **** | — | **** | — | **** | **** | 304 | **** | **** | 54,455 | **** | **** | 54,759 | **** | **** | 22 | **** | **** | 54,781 | **** | ||
| Transactions with Group owners in their capacity as owners | ||||||||||||||||||||||||||||
| Initial public offering, net of underwriting discount and incremental and direct costs | **** | 12 | — | 9 | 86,441 | — | — | — | **** | 86,450 | **** | — | **** | 86,450 | **** | |||||||||||||
| Issue of ordinary shares | **** | 12 | — | 45 | 63,132 | — | — | — | **** | 63,177 | **** | — | **** | 63,177 | **** | |||||||||||||
| Par value change from 1.1211 U.S. Dollars to 1 U.S. Dollars | **** | 12 | — | (70 | ) | 70 | — | — | — | **** | — | **** | — | **** | — | **** | ||||||||||||
| Share-options exercise | **** | 12 | — | — | 6,979 | (6,898 | ) | — | — | **** | 81 | **** | — | **** | 81 | **** | ||||||||||||
| Share-based payment charges | **** | 9 | — | — | — | 5,360 | — | — | **** | 5,360 | **** | — | **** | 5,360 | **** | |||||||||||||
| Forfeitures | **** | 12 | — | — | — | (6 | ) | — | — | **** | (6 | ) | — | **** | (6 | ) | ||||||||||||
| Warrant exercise | **** | 12 | — | 4 | 529 | (533 | ) | — | — | **** | — | **** | — | **** | — | **** | ||||||||||||
| Transactions with Group owners in their capacity as owners | **** | — | **** | **** | (12 | ) | **** | 157,151 | **** | (2,077 | ) | **** | — | **** | **** | — | **** | **** | 155,062 | **** | **** | — | **** | **** | 155,062 | **** | ||
| Balance as of September 30^th^,2021 | **** | — | **** | **** | 590 | **** | **** | 157,151 | **** | 10,505 | **** | **** | 423 | **** | **** | 86,204 | **** | **** | 254,873 | **** | **** | 18 | **** | **** | 254,891 | **** | ||
| Balance as of January 1^st^,2020 | **** | 602 | **** | **** | — | **** | **** | — | **** | 5,287 | **** | **** | 14 | **** | **** | 18,460 | **** | **** | 24,363 | **** | **** | 166 | **** | **** | 24,529 | **** | ||
| Adjustments due to reorganizations | (602 | ) | 602 | **** | — | **** | — | **** | **** | — | **** | **** | — | **** | **** | — | **** | **** | — | **** | **** | — | **** | |||||
| Adjusted balance as of January 1^st^,2020 | **** | — | **** | **** | 602 | **** | **** | — | **** | 5,287 | **** | **** | 14 | **** | **** | 18,460 | **** | **** | 24,363 | **** | **** | 166 | **** | **** | 24,529 | **** | ||
| Comprehensive Income for the period | ||||||||||||||||||||||||||||
| Profit of the period | — | — | — | — | — | 16,586 | **** | 16,586 | **** | — | **** | 16,586 | **** | |||||||||||||||
| Exchange difference on translation on foreign operations | — | — | — | — | (516 | ) | (39 | ) | **** | (555 | ) | — | **** | (555 | ) | |||||||||||||
| Total Comprehensive Income for the period | **** | — | **** | **** | — | **** | **** | — | **** | — | **** | **** | (516 | ) | **** | 16,547 | **** | **** | 16,031 | **** | **** | — | **** | **** | 16,031 | **** | ||
| Transactions with Group owners in their capacity as owners | ||||||||||||||||||||||||||||
| Share-based payments | **** | 9 | — | — | — | 7,039 | — | — | **** | 7,039 | **** | — | **** | 7,039 | **** | |||||||||||||
| Transaction between shareholders | **** | 12 | — | — | — | — | — | 163 | **** | 163 | **** | (163 | ) | **** | — | **** | ||||||||||||
| — | — | — | — | — | (15,000 | ) | **** | (15,000 | ) | — | **** | (15,000 | ) | |||||||||||||||
| Distribution of retained earnings | ||||||||||||||||||||||||||||
| Transactions with Group owners in their capacity as owners | **** | — | **** | **** | — | **** | **** | — | **** | 7,039 | **** | **** | — | **** | **** | (14,837 | ) | **** | (7,798 | ) | **** | (163 | ) | **** | (7,961 | ) | ||
| Balance as of September 30^th^,2020 | **** | — | **** | **** | 602 | **** | **** | — | **** | 12,326 | **** | **** | (502 | ) | **** | 20,170 | **** | **** | 32,596 | **** | **** | 3 | **** | **** | 32,599 | **** |
The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements.
F-3
DLocal Limited
Consolidated Condensed Interim Statements of Cash Flows
For the nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)
| Notes | September 30,2021 | September 30,2020 | ||||||
|---|---|---|---|---|---|---|---|---|
| Cash flows from operating activities | ||||||||
| Profit before income tax | 59,837 | 18,817 | ||||||
| Adjustments: | ||||||||
| Net, interest expense from financial instruments | (1,289 | ) | (342 | ) | ||||
| Interest charges for lease liabilities | 97 | 15 | ||||||
| Other finance expense | 414 | 45 | ||||||
| Amortization of Intangible assets | **** | 10 | 2,594 | 520 | ||||
| Depreciation of Property, plant and equipment | **** | 10 | 309 | 96 | ||||
| Amortization of<br>Right-of-use asset | **** | 10 | 337 | 128 | ||||
| Revenue reduction related to prepaid assets | **** | 16 | 150 | — | ||||
| Share-based payment expense, net of forfeitures | **** | 9 | 5,354 | 7,039 | ||||
| Net exchange differences | 528 | (212 | ) | |||||
| Fair value (gain)/loss on financial assets at fair value through profit or loss | 16 | (12 | ) | |||||
| Other operating (gain)/loss | **** | 20 | (2,896 | ) | 2,831 | |||
| Net Impairment loss/(gain) on financial assets | **** | 15 | 8 | (853 | ) | |||
| **** | 65,459 | **** | **** | 28,072 | **** | |||
| Changes in working capital | ||||||||
| Increase in Trade and other receivables | **** | 15 | (91,964 | ) | (35,561 | ) | ||
| Increase in Other assets | **** | 16 | 146 | (23 | ) | |||
| Increase in Trade and other payables | **** | 18 | 101,611 | 59,223 | ||||
| Increase in Tax Liabilities | **** | 19 | 847 | — | ||||
| Increase in Provisions | **** | 21 | 1,016 | 445 | ||||
| Cash from operating activities | **** | 77,115 | **** | **** | 52,156 | **** | ||
| Income tax paid | **** | 11 | (7,975 | ) | (1,337 | ) | ||
| Net cash from operating activities | **** | 69,140 | **** | **** | 50,819 | **** | ||
| Cash flows from investing activities | ||||||||
| Acquisitions of Property, plant and equipment | (1,639 | ) | (266 | ) | ||||
| Additions of Intangible assets | **** | 17 | (43,575 | ) | (2,394 | ) | ||
| Net collections of / (investments in) financial assets at FVPL | 7,237 | (8,087 | ) | |||||
| Interest collected from financial instruments | 1,289 | 342 | ||||||
| Net cash used in investing activities | **** | (36,688 | ) | **** | (10,405 | ) | ||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of shares | **** | 12 | 63,177 | — | ||||
| Proceeds from initial public offering | **** | 1.1.b | 87,088 | — | ||||
| Initial public offering expenses paid | (638 | ) | — | |||||
| Share-options exercise | 81 | — | ||||||
| Dividends paid | — | (15,000 | ) | |||||
| Interest payment on lease liabilities | (97 | ) | (15 | ) | ||||
| Principal payment on lease liabilities | (326 | ) | (133 | ) | ||||
| Other finance expense paid | (414 | ) | (45 | ) | ||||
| Net cash from / (used in) financing activities | **** | 148,871 | **** | **** | (15,193 | ) | ||
| Net increase in cash flow | **** | 181,323 | **** | **** | 25,221 | **** | ||
| Cash and cash equivalents at the beginning of the period | **** | 111,733 | **** | **** | 34,765 | **** | ||
| Effects of exchange rate changes on cash and cash equivalents | (1 | ) | 28 | |||||
| Cash and cash equivalents at the end of the period | **** | 293,055 | **** | **** | 60,014 | **** |
The accompanying notes are an integral part of these Consolidated Condensed Interim Financial Statements.
F-4
DLocal Limited
Notes to the Consolidated Condensed Interim Financial Statements
At September 30, 2021
(All amounts in thousands of U.S. Dollars except share data or as otherwise indicated)
1. General information and Reorganization
dLocal Limited (“dLocal” or the “Company”) is a holding company, referred to together with its subsidiaries as the “Group”. dLocal is a limited liability company. The Group was established on October 5, 2016, under the holding company dLocal Group Limited, domiciled and incorporated in Malta, and on April 14, 2021 it was reorganized under dLocal, domiciled and incorporated in the Cayman Islands. The Company is the ultimate controlling party of the Group.
The Group processes online payment transactions through more than 600 payment methods on September 30, 2021 (600 in the year 2020), enabling enterprise merchants located in developed economies (mainly United States, Europe and China) to get paid (“payins”) from customers in emerging markets and to make payments (“payouts”) to customers in emerging markets. As of the date of issuance of this Consolidated Condensed Interim Financial Statements, the Group continued to focus on its expansion efforts bringing the total number of countries in the geographic network to over 30.
In order to conduct its business, the Group has direct connections with banks, acquirers and payments processors to process payments locally in emerging markets. It also operates with financial institutions to expatriate/ repatriate the funds to/from the developed economies where the merchant customers elect to settle their funds in the currency of their preference (mainly U.S. Dollar, Euro). These consolidated condensed interim financial statements include dLocal’s subsidiaries and details of the structure are included under Note 4: Consolidation of subsidiaries.
The Group is licensed and regulated in the EU as an Electronic Money Issuer, or EMI, and Payment Institution, or PI, and registered as a Money Service Business with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or FinCEN, and we operate and are licensed, as applicable, in more than 20 countries in emerging markets, primarily in the Americas, Asia and Africa.
In addition, the Group is subject to laws aimed at preventing money laundering, corruption and the financing of terrorism. This regulatory landscape is constantly changing, including as a consequence of the implementation of the Fourth Anti-Money Laundering Directive (Directive 2015/849/EU, “MLD4”) and the proposed amendments to the MLD4, often referred to as the fourth Anti-Money Laundering Directive.
Reorganization
On April 14, 2021, in a series of transactions as further described below, the owners of dLocal Group Limited completed the contribution of 100% of their respective interests in dLocal Group Limited, with par value 1.1211 U.S. Dollars per share, on a pro rata basis to a newly formed entity, dLocal, in exchange for 100% of the common shares of dLocal, with par value 1 U.S. Dollars per share with no additional consideration, is defined as the “Reorganization”. The purpose of the Reorganization was to facilitate the initial public offering of the Group. dLocal had no prior assets, holdings or operations.
In connection with the Reorganization, the Group amended its existing employee share incentive plan, the “2020 Global Share Incentive Plan”. In this context, all obligations of dLocal Group Limited under this plan (including award agreements issued thereunder) have been transferred to dLocal, and options to purchase ordinary shares of dLocal Group Limited have been converted into options to purchase ordinary shares of dLocal. The conversion was based on a ratio intended to maintain in all material respects the same, and in no event greater, economic benefit to optionees as provided under the plans in effect prior to the Reorganization.
F-5
Additionally, the written resolution of dLocal’s shareholders dated May 19, 2021 and effective June 2, 2021, approved a 500-for-1 stock split of dLocal’s common shares, whereby every share of capital stock of dLocal was converted into 500 shares, changing the par value of dLocal’s common shares from 1 U.S. Dollars to 0.002 U.S. Dollars. Therefore, dLocal increased total shares outstanding from 577,008 shares to 288,504,000 shares. Consequently, the 2020 Global Share Incentive Plan was also amended to reflect such change in the par value of the common shares. References made to outstanding shares and per share amounts in the accompanying financial statements and applicable disclosures have been retroactively adjusted to reflect this stock split.
The Reorganization was limited to entities which were all under the control of the same shareholder group and was implemented in part to facilitate the IPO, it did not qualify as a business combination under common control; rather, it was a simple Reorganization of the capital of dLocal Group Limited, the existing organization. Therefore, all financial and other information herein relating to December and September 2020 are presented using the historical values from the consolidated financial statements of dLocal Group Limited. However, the issued share capital reflects that of Dlocal as of the Reorganization date.
1.1. Significant events during the period
a) Warrantexercise
On September 2, 2021 a holder of warrants exercised its net issuance right resulting in a net issuance on September 7, 2021 of 2,112,676 shares at a Fair Market Value of U.S. Dollars 65.14 per share, calculated using the average price of 5 business days before the exercise date.
b)Initial Public Offering (IPO)
On June 3, 2021, the Company successfully completed an initial public offering of its shares on the Nasdaq Global Select Market. The Company issued 4,411,765 shares, at a price of 21 U.S. Dollars per share prior to the underwriting discount of 6%. In addition, on June 3, 2021 the over-allotment option was exercised by the underwriters of the initial public offering on a secondary offering.
c) Acquisition of certain assets from PrimeiroPay
On March 11, 2021, dLocal signed a contract to acquire certain assets (mainly merchant agreements) from Primeiropay S.A.R.L and PrimeiroPay Technology GmbH (“Primeiropay”) in accordance to the Transfer of a Going Concern Agreement signed between the parties. The purchase of this acquisition of assets amounted to 40 million U.S. Dollars, of which 1.33 million U.S. Dollars is contingent consideration (subject to the achievement of the “earn-out”) and 38.67 million U.S. Dollars was an immediate cash consideration, with an effective date of April 1, 2021.
Primeiropay is an international payment service provider that delivers payment services for international merchants that want to accept payments from their international customers without setting up a local entity through processing all cards and payment methods domestically in local currencies. The concentration test outlined on IFRS 3 was met and therefore the transaction was classified as an asset acquisition.
For further details refer to Note 13: Asset acquisition.
d) Loan related to Employee share purchase plan (ESPP)
In November 2020 dLocal Group Limited signed a non-recourse “Loan Agreement” with two officers to fund the acquisition of shares under the ESPP.
During March and April 2021, dLocal received payments for USD 31,644 (equivalent to 15,459,000 common shares) that were considered as the collection of the exercise price of the options under the ESPP for the issuance of shares. Therefore, dLocal recognized for such collections the cash inflow against equity. As of the date of issuance of this Consolidated Condensed Interim Financial Statements, the loan and the corresponding accrued interest had been fully repaid.
F-6
e) Coronavirus pandemic
As of the date of this Consolidated Condensed Interim Financial Statements, the impact of the COVID-19 pandemic on our operations has had a different impact across our different product offerings and the different verticals the Group serves, with certain industries benefiting from increased adoption (e.g., online retail, online streaming, online gaming, social media) while others suffering initially from decreased usage (e.g., travel, ride hailing), however subsequently recovered to its pre-pandemic volumes.
The Group business has far showed a net benefit from the shift from in-store shopping and traditional payment methods towards e-commerce and digital payments (and overall higher exposure to online industries benefiting from increased adoption). The ultimate extent to which the COVID-19 pandemic impacts dLocal’s business, financial condition, and results of operations will depend on future developments, which are highly uncertain, difficult to predict, and subject to change, including, but not limited to, the duration, scope, severity, and geographic spread of the outbreak, its impact on the global economy, actions taken to contain or limit the impact of COVID-19, such as the availability of an effective vaccine or treatment, geographic variation in how countries and states are handling the pandemic, the appearance of new variants of the virus, and how quickly and to what extent normal economic and operating conditions may potentially resume.
The Directors continue to believe that even if the pandemic may adversely affect the Group in the short-term, in the long-term the Group’s assets will be preserved, and consequently the going concern basis applied to these financial statements is still applicable.
2. Presentation and preparation of theConsolidated Condensed Interim Financial Statements and significant accounting policies
2.1. Basis of preparation of consolidated condensed interimfinancial information
These Consolidated Condensed Interim Financial Statements for the nine-month and three-month periods ended September 30, 2021 have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” as issued by the International Accounting Standard Board.
These Consolidated Condensed Interim Financial Statements do not include all the notes of the type normally included in an annual consolidated financial statement. Accordingly, this report should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2020 (the “Annual Financial Statements”).
The accounting policies and critical accounting estimates and judgments adopted, except for those explicitly indicated on these Consolidated Condensed Interim Financial Statements, are consistent with those of the previous financial year and corresponding interim reporting period.
All amounts are presented in thousands of U.S. Dollars, except share data or as otherwise indicated.
These Consolidated Condensed Interim Financial Statements for the nine-month and three-month periods ended September 30, 2021 were authorized for issuance by the dLocal’s Board of Directors on November 16, 2021.
2.2.Share-based payments
During the nine-month period ended September 30, 2021, the Group granted new restricted share units to executives and employees in return for their services, which represented changes in the composition of share options outstanding at the end of the period.
F-7
2.2.1. Employee Share Purchase Plan (“ESPP”)
Set out below are summaries of restricted share units and share options granted under the plan*:
| September 30, 2021 | December 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Average exerciseprice per shareoption<br>(U.S. Dollars) | Number ofoptions andRSUs | Average exerciseprice per shareoption<br>(U.S. Dollars) | Number<br>of options | ||||||
| At the beginning of the period | **** | 2.24 | **** | 17,361,000 | **** | **** | 1.22 | **** | 406,500 |
| Granted during the period | 3.69 | 2,292,000 | 2.10 | 16,294,000 | |||||
| Exercised during the period | 2.03 | (15,685,000 | ) | — | — | ||||
| Forfeited during the period | 4.15 | (15,000 | ) | — | — | ||||
| At the end of the period | **** | 1.16 | **** | 3,953,000 | **** | **** | 2.08 | **** | 16,700,500 |
| Vested and exercisable at the end of the period | 3.54 | 402,500 | 2.02 | 15,685,000 | |||||
| * | Retroactively adjusted to reflect the effect of the stock split (Note 1). | ||||||||
| --- | --- |
No options expired during the periods covered by the above table.
Share options and restricted share units outstanding at the end of the period have the following expiry dates and exercise prices*:
| Grant date | Vesting period | Expiry date | Exercise price(U.S. Dollarsper A Share) | Share optionsand RSUs<br>September 30,<br>2021 | Share optionsand RSUsDecember 31,2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| August 1^st^, 2018 | 3 years | August 1^st^, 2021 | 0.74 | 90,500 | 271,500 | |||||
| October 1^st^, 2019 | 3 years | October 1^st^, 2022 | 2.18 | 90,000 | 135,000 | |||||
| January 31^st^, 2020 | Less than 1 year | December 31^st^, 2024 | 2.04 | — | 15,459,000 | |||||
| August 24^th^, 2020 | 5 years | August 24^th^, 2025 | 3.30 | 835,000 | 835,000 | |||||
| November 15^th^, 2020 | 4 years | November 15^th^, 2024 | 4.15 | 135,000 | 135,000 | |||||
| November 23^rd^, 2020 | 5 years | November 23^rd^, 2025 | 3.88 | 525,500 | 525,500 | |||||
| January 1^st^, 2021 | 5 years | January 1^st^, 2026 | 3.88 | 210,000 | — | |||||
| March 1^st^, 2021 | 1 year | March 1^st^, 2022 | 0.002 | 5,500 | ** | — | ||||
| March 2^nd^, 2021 | 5 years | March 2^nd^, 2026 | 7.44 | 10,000 | — | |||||
| March 11^th^, 2021 | 5 years | March 11^th^, 2026 | 0.002 | 1,031,000 | ** | — | ||||
| March 11^th^, 2021 | 5 years | March 11^th^, 2026 | 7.44 | 36,000 | — | |||||
| March 12^nd^, 2021 | 5 years | March 12^nd^, 2026 | 7.44 | 7,000 | — | |||||
| March 15^th^, 2021 | 5 years | March 15^th^, 2026 | 7.44 | 7,500 | — | |||||
| March 29^th^, 2021 | 5 years | March 29^th^, 2026 | 7.44 | 10,000 | — | |||||
| May 11^th^, 2021 | 5 years | May 11^th^, 2026 | 7.44 | 927,500 | — | |||||
| May 11^th^, 2021 | 3 years | May 11^th^, 2024 | 0.002 | 22,500 | ** | — | ||||
| May 18^th^, 2021 | 5 years | May 18^th^, 2026 | 16.17 | 10,000 | — | |||||
| Total | **** | 3,953,000 | **** | **** | 17,361,000 | |||||
| Weighted average remaining contractual life of restricted share units and share<br>options outstanding at end of the period | 4.22 years | 4.02 years | ||||||||
| * | Retroactively adjusted to reflect the effect of the stock split (Note 1). | |||||||||
| --- | --- | |||||||||
| ** | It corresponds to Restricted Share Units (RSUs) granted. | |||||||||
| --- | --- |
F-8
2.3. New accounting pronouncements
The new and amended standards and interpretations that are issued, up to the date of issuance of our Consolidated Condensed Interim Financial Statements are disclosed below. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. The Group did not change its accounting policies or make retrospective adjustments as a result of new accounting standards made applicable on January 1, 2021.
Effective for periods beginning on or after January 1, 2021
The following new standards have been issued by IASB and the nature and effect of these changes are disclosed below. This change, however, did not have material impacts on the consolidated condensed interim financial information.
Interbank Offered Rates “IBOR” reform and its effects onfinancial report – phase 2
‘Phase 2’ of the amendments requires that, for financial instruments measured using amortized cost measurement (that is, financial instruments classified as amortized cost and debt financial assets classified as Fair Value through Other Comprehensive Income “FVOCI”), changes to the basis for determining the contractual cash flows required by interest rate benchmark reform is reflected by adjusting their effective interest rate. No immediate gain or loss is recognized. A similar practical expedient exists for lease liabilities. These expedients are only applicable to changes that are required by interest rate benchmark reform, which is the case if, and only if, the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis (that is, the basis immediately preceding the change).
Where some or all of a change in the basis for determining the contractual cash flows of a financial asset and liability do not meet the above criteria, the above practical expedient is first applied to the changes required by interest rate benchmark reform, including updating the instrument’s effective interest rate. Any additional changes are accounted for in the normal way (that is, assessed for modification or derecognition, with the resulting modification gain/loss, recognized immediately in profit or loss where the instrument is not derecognized).
For lease liabilities where there is a change to the basis for determining the contractual cash flows, as a practical expedient the lease liability is remeasured by discounting the revised lease payments using a discount rate that reflects the change in the interest rate where the change is required by IBOR reform. If lease modifications are made in addition to those required by IBOR reform, the normal requirements of IFRS 16 are applied to the entire lease modification, including those changes required by IBOR reform.
The Group adopted amendments to IFRS 9, IAS 39, IFRS 7, and IFRS 16 Interest Rate Benchmark Reform – Phase 2 as issued in August 2020. All the amendments listed above did not have any impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods.
3. Accounting estimates and judgments
Accounting estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The critical accounting estimates and judgments adopted on these Consolidated Condensed Interim Financial Statements are consistent with those of the previous financial year and corresponding interim reporting period.
The main changes in estimates and assumptions during the nine-month period ended September 30, 2021 are addressed below:
3.1. Share-based payment transactions toemployees
dLocal estimates share-based payment transactions using the most appropriate valuation model and underlying assumptions, which depend on the terms and conditions of the grant and the information available at the grant date.
F-9
Where shares are forfeited due to a failure by the employee to satisfy the service conditions, any expenses previously recognized in relation to such shares are reversed effective from the date of the forfeiture.
The Group uses certain methodologies to estimate fair value of the options granted which include the following:
| • | estimation of fair value based on equity transactions with third parties close to the grant date.<br> |
|---|---|
| • | other valuation techniques including option pricing models such as Black-Scholes. |
| --- | --- |
These estimates also require determination of the most appropriate inputs to the valuation models including assumptions regarding the expected life of a share option and expected volatility of the price of the Group’s shares.
The model inputs for options granted during the nine-month period ended September 30, 2021 included:
| a) | options are granted for no consideration and the calculation of the fair value is based on historical prices of<br>comparable shares listed on Nasdaq. |
|---|---|
| b) | average exercise price*: 3.69 U.S. Dollars |
| --- | --- |
| c) | grant date: January 1^st^, February 25^th^, March 2^nd^, March 11^th^, March 12^nd^,<br>March 15^th^, March 29^th^, May 11^th^ and May<br>18^th^ of the year, 2021. |
| --- | --- |
| d) | expiry date: January 1^st^, 2026, 2026, February 25^th^, 2026, March 2^nd^, 2026, March 11^th^, 2026, March 12^nd^, 2026, March 15^th^, 2026, March 29^th^, 2026, May 11^st^, 2026, May 11^st^, 2024 and May 18^th^, 2026. |
| --- | --- |
| e) | average share price at grant date*: 7.40 U.S. Dollars |
| --- | --- |
| f) | average expected price volatility of the company’s shares: 39.7% |
| --- | --- |
| g) | average risk-free interest rate: 0.7% |
| --- | --- |
| * | Retroactively adjusted to reflect the effect of the stock split (Note 1). |
| --- | --- |
The model inputs for options granted during the nine-month period ended September 30, 2020 included:
| h) | options are granted for no consideration and the calculation of the fair value is based on historical prices of<br>comparable shares listed on Nasdaq. |
|---|---|
| i) | average exercise price*: 2.10 U.S. Dollars |
| --- | --- |
| j) | grant date: January 31^st^ and August 24^th^ of the year 2020 |
| --- | --- |
| k) | expiry date: December 31^st^, 2024 and August 24^th^ of 2025. |
| --- | --- |
| l) | average share price at grant date*: 2.28 U.S. Dollars |
| --- | --- |
| m) | average expected price volatility of the company’s shares: 35.35% |
| --- | --- |
| n) | average risk-free interest rate: 1.42% |
| --- | --- |
| * | Retroactively adjusted to reflect the effect of the stock split (Note 1). |
| --- | --- |
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility based on publicly available information.
4. Consolidation of subsidiaries
dLocal Limited, located in Cayman, is the parent company of the Group and acts as a holding company for subsidiaries whose main activity is cross-border payments, enabling international merchants to access end customers in emerging markets. Its revenue comes from dividends receivable from subsidiaries and share of profit from subsidiary partnership.
F-10
The immediate subsidiary is dLocal Group Limited, an intermediate holding company located in Malta, whose subsidiaries are: dLocal Markets Limited, dLocal PTE Limited, dLocal Limited, dLocal LLP, dLocal Corp LLP, dLocal Inc. and dLocal Technologies S.A.
dLocal Markets Limited (Malta) is the majority shareholder of the Collection Agents located in the emerging markets. Its principal activity is to act as a holding company for such Collection Agents.
The immediate Collection Agents subsidiaries of dLocal Markets Limited are: dLocal Brasil Pagamentos Ltda., Demerge Brasil Facilitadora de Pagamentos Ltda., Dlocal Argentina S.A., Demerge Mexico S.A. de C.V., Dlocal Mexico S.A. DE C.V., Dlocal Chile SPA, Demerge Chile SPA, Pagos y Servicios Limitada, Dlocal Colombia S.A.S., Demerge Colombia S.A.S., Demerge Peru S.A.C., Depansum Solutions Private Limited, Dlocal Uruguay S.A., Demerege Ecuador S.A., PT. Dlocal Solutions Indonesia, DLocal Bangladesh Ltd., Dlocal Egypt LLC, DLocal Morocco SARL AU, Demerge Nigeria Ltd., Dlocal Panama SA, Demerge República Dominicana S.A.S., dLocal Paraguay S.A. and Depansum PTY.
As of September 30, 2021, December 31, 2020 and 2019 dLocal PTE Limited (Singapore) was the minority-interest shareholder of the following Collection Agents: dLocal Argentina S.A., dLocal Bangladesh Ltd., dLocal Brasil Pagamentos Ltda., Demerge Brasil Facilitadora de Pagamentos Ltda., PT. dLocal Solutions Indonesia, Demerge Nigeria Ltd., dLocal Egypt LLC, Demerge Argentina S.A. and dLocal Paraguay S.A.. Its principal activity is to act as a holding company for Collection Agents of countries where the law requires the existence of more than one shareholder.
dLocal Limited (Malta), dLocal LLP (UK) and dLocal Corp LLP (UK) act as Payment Providers within the structure of the Group for cross border transactions. These companies provide payment processing services to international merchants and work with Collection Agents based on the emerging markets. Payment Providers sign “Payment Processing Services Agreements” with merchants to enable them to accept and disburse payments in emerging markets. For local to local transactions, Collection Agents mentioned above act as Payment Providers.
Twenty-three subsidiaries of the Group act as Collection Agents based on each country targeted by dLocal and provide the Payment Providers with payment and collection services in the local currency of each country.
dLocal Technologies S.A. (Uruguay), dLocal Israel Ltd. and Demerge Argentina S.A. act as Service Providers within the structure of the Group. These companies provide technological and support services to the Payment Providers.
The Group evaluated whether to present additional information for the amount of non-controlling interest presented in the Consolidated Statement of Financial Position. The Group’s management based its judgement on information for each subsidiary that had a non-controlling interest and considered both quantitative considerations (i.e. the size of the subsidiary) and qualitative considerations (i.e. the nature of the subsidiary), concluding that disclosing such information is not material.
5. Segment reporting
The Group operates in a single operating segment, which is “payment processing”. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker, who in the Group’s case is the Executive Team, in deciding how to allocate resources and assess performance. The Executive Team is composed of the Chief Executive Officer (“CEO”), the Chief Operating Officer (“COO”), the Chief Financial Officer (“CFO”) and the President of Dlocal Limited.
The Executive Team evaluates the Group’s financial information and resources and assesses the financial performance of these resources on a consolidated basis on the basis of Revenues, Adjusted EBITDA and Adjusted EBITDA margin as further described below.
F-11
The Group’s revenue, results and assets for this one reportable segment can be determined by reference to the Consolidated Condensed Statement of Comprehensive Income and Consolidated Condensed Statement of Financial Position.
As required by IFRS 8 Operating Segments, below are presented applicable entity-wide disclosures related to dLocal’s revenues.
Revenue breakdown by region
The Group’s revenues arise from operations in twenty-six countries, where the Company processes payments for its merchants´ customers.
Based on the region where payments from/to such customers are processed this is the revenue breakdown:
| Nine-months ended September 30 | Three-months ended September 30 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | YoY % | 2020 | 2021 | YoY % | 2020 | |||||||||
| LatAm | 152,239 | 146.7 | % | 61,717 | 62,684 | 128.0 | % | 27,497 | ||||||
| Other emerging markets | 15,624 | 101.0 | % | 7,773 | 5,962 | 77.8 | % | 3,353 | ||||||
| Revenues ^1^ | **** | 167,863 | **** | 141.6 | % | **** | 69,490 | **** | 68,646 | **** | 122.5 | % | **** | 30,850 |
Revenue with large customers
During the nine-month period ended September 30, 2021 the Group operated with more than 400 merchants (more than 240 merchants in the period ended September 30, 2020).
For the nine-month period ended September 30, 2021, the Group’s revenue from its top 10 merchants represented 60.0% of revenue (68.4% of revenue for the nine-month period ended September 30, 2020). For the nine-month period ended September 30, 2021 there are two customers (two for the nine-month period ended September 30, 2020) that on an individual level accounted for more than 10% of the total revenue.
Adjusted EBITDA and Adjusted EBITDA Margin
The Executive Team assesses the financial performance of the Group’s sole segment by Revenues, Adjusted EBITDA and Adjusted EBITDA Margin. The Adjusted EBITDA is defined as the consolidated profit from operations before financing and taxation for the year or period, as applicable, before depreciation of property, plant and equipment, amortization of right-of-use assets and intangible assets, and further excluding the changes in fair value of financial assets and derivative financial instruments carried at fair value through profit or loss, impairment gain/loss on financial assets, transaction costs, share-based payment non-cash charges, secondary offering expenses and inflation adjustment. The Group defines Adjusted EBITDA Margin as the Adjusted EBITDA divided by consolidated revenues.
| ^1^ | The Group’s revenues as of September 30, 2021 from customers attributed to the entity’s country<br>of domicile, are USD 76,716 while USD 91,144 are attributed to the domicile of the rest of the countries (USD 37,439 and USD 32,051 in September 30, 2020, respectively). |
|---|
F-12
The Group reconciles the segment’s performance measure to profit for the period as presented in the Consolidated Condensed Statements of Comprehensive Income as follows:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Notes | 2021 | 2020 | 2021 | 2020 | ||||||||||
| Profit for the period | **** | 54,304 | **** | **** | 16,586 | **** | **** | 19,669 | **** | **** | 8,622 | **** | ||
| Income tax expense | 11 | 5,533 | 2,231 | 2,558 | 932 | |||||||||
| Inflation adjustment | 197 | (34 | ) | 156 | (9 | ) | ||||||||
| Interest charges on leases | 97 | 15 | 46 | 5 | ||||||||||
| Net Interest expense from financial assets at FVPL | (1,289 | ) | (342 | ) | (1,095 | ) | (210 | ) | ||||||
| Fair value losses/(gains) on financial assets at FVPL | 16 | (12 | ) | 6 | (9 | ) | ||||||||
| Other operating (gain)/loss | **** | 20 | (2,896 | ) | 2,831 | — | 2,760 | |||||||
| Other finance expense | 414 | 45 | 178 | 9 | ||||||||||
| Impairment loss/(gain) on financial assets | **** | 15 | 8 | (853 | ) | (159 | ) | 45 | ||||||
| Depreciation and amortization | **** | 10 | 3,240 | 744 | 1,381 | 282 | ||||||||
| Secondary offering expenses (i) | **** | 8 | 4,442 | — | 695 | — | ||||||||
| Transaction costs (ii) | **** | 8 | 665 | — | 211 | — | ||||||||
| Share-based payment non-cash charges, net of<br>forfeitures | **** | 9 | 5,354 | 7,039 | 2,673 | 106 | ||||||||
| Adjusted EBITDA | **** | 70,085 | **** | **** | 28,250 | **** | **** | 26,319 | **** | **** | 12,533 | **** | ||
| Revenues | **** | 6 | **** | 167,863 | **** | **** | 69,490 | **** | **** | 68,646 | **** | **** | 30,850 | **** |
| Adjusted EBITDA | **** | 70,085 | **** | **** | 28,250 | **** | **** | 26,319 | **** | **** | 12,533 | **** | ||
| Adjusted EBITDA Margin | **** | 41.8 | % | **** | 40.7 | % | **** | 38.3 | % | **** | 40.6 | % | ||
| (i) | Corresponds to expenses assumed by dLocal in relation to secondary offering of its shares.<br> | |||||||||||||
| --- | --- | |||||||||||||
| (ii) | Corresponds to costs related to the acquisition of assets of Primeiropay as more fully explained in Note 13:<br>Asset acquisition. | |||||||||||||
| --- | --- |
6. Revenues and Cost of Services
(a) Revenue and Gross profit description
dLocal derives revenue from processing payments for international merchants to enable them to operate in selected emerging markets.
The breakdown of revenue from contracts with customers per type of service is as follows:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Transaction revenues (i) | 162,078 | 65,065 | 66,430 | 28,692 | ||||||||
| Other revenues (ii) | 5,785 | 4,425 | 2,216 | 2,158 | ||||||||
| Revenues from payment processing (iii) | **** | 167,863 | **** | **** | 69,490 | **** | **** | 68,646 | **** | **** | 30,850 | **** |
| Cost of services | (76,361 | ) | (30,084 | ) | (34,202 | ) | (13,969 | ) | ||||
| Gross profit | **** | 91,502 | **** | **** | 39,406 | **** | **** | 34,444 | **** | **** | 16,881 | **** |
| (i) | Transaction revenues are comprised of transaction fees, defined either as percentage of the transaction value<br>or a fixed amount per transaction, as well as foreign exchange service fee, usually established as a percentage of the transaction value. These fees are recognized as revenue at a point in time when a payment transaction has been processed.<br> | |||||||||||
| --- | --- | |||||||||||
| (ii) | Other revenues are mainly comprised of minor fees, such as initial setup fees, installment fee, minimum monthly<br>fees, chargebacks fees, refunds fees and small transfer fees. | |||||||||||
| --- | --- | |||||||||||
| (iii) | In 2021 revenues include an amortization charge of USD 150 (USD 17 for the nine-month period ended<br>September 30, 2020) related to prepaid assets, as detailed in Note 16: Other assets. | |||||||||||
| --- | --- |
F-13
(b) Revenue recognized at a point in time and over time
Transaction revenues are recognized at a point in time when the payment transaction is processed. Other revenues are recognized as revenue at a point in time when the respective performance obligation is satisfied. The Group did not recognize revenues over time for the quarters ended September 30, 2021 and 2020.
(c) Cost of services
Cost of services are composed of the following:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Processing costs (i) (1) | 72,109 | 28,506 | 32,371 | 13,404 | ||||
| Hosting expenses (ii) | 2,253 | 782 | 1,046 | 285 | ||||
| Salaries and wages (iii) | 454 | 276 | 195 | 100 | ||||
| Amortization of intangible assets (iv) | 1,545 | 520 | 590 | 180 | ||||
| Cost of services | **** | 76,361 | **** | 30,084 | **** | 34,202 | **** | 13,969 |
| (i) | Mainly corresponds to fees that financial institutions (banks, local acquirers or payment methods) charge the<br>Group, which are typically a percentage of the transaction value but in some instances, they also could be a fixed fee and are related to payment processing, cash advances, and installment payments. Costs vary from one institution to another and<br>usually depends on the settlement period contracted with each such institution and the payment method used. | |||||||
| --- | --- | |||||||
| (ii) | Expenses related to hosting services for the Group’s payment platform. | |||||||
| --- | --- | |||||||
| (iii) | Consist of salaries and wages of the operations department directly involved in the day-to-day operations. For further detail refer to Note 9: Employee Benefits. | |||||||
| --- | --- | |||||||
| (iv) | Amortization of intangible assets corresponds to the amortization of the internally generated software (i.e.,<br>dLocal’s payment platform) by the Group. For further detail refer to Note 17: Intangible Assets. | |||||||
| --- | --- | |||||||
| (1) | For the nine-month period ended September 30, 2021, the amount includes foreign exchange losses and<br>broker’s costs of USD 3,431 on the processed volume between the processing date and the expatriation or repatriation of funds date (USD 3,690 for the nine-month period ended September 30, 2020). | |||||||
| --- | --- |
7. Technology and development expenses
Technology and development expenses are composed of the following:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Salaries and wages (i) | 880 | 666 | 495 | 311 | ||||
| Software licenses (ii) | 270 | 186 | 110 | 61 | ||||
| Infrastructure expenses (iii) | 562 | 179 | 261 | 73 | ||||
| Information and technology security expenses (iv) | 135 | 110 | 62 | 35 | ||||
| Other technology expenses | 385 | 114 | 188 | 48 | ||||
| Total Technology and development expenses | **** | 2,232 | **** | 1,255 | **** | 1,116 | **** | 528 |
| (i) | Consist primarily of FTEs compensation related to technology related roles. For further detail on total<br>salaries and wages refer to Note 9: Employee Benefits | |||||||
| --- | --- | |||||||
| (ii) | Consist of software licenses used by the technology development department for the development and maintenance<br>of the platform. | |||||||
| --- | --- | |||||||
| (iii) | Corresponds to information technology costs to support our infrastructure and back-office operations.<br> | |||||||
| --- | --- | |||||||
| (iv) | Comprises expenses of overall monitoring and security of our network and platform. | |||||||
| --- | --- |
F-14
8. Sales and marketing expenses and General and administrative expenses
Sales and marketing expenses and General and administrative expenses are composed of the following:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| Sales and marketing expenses | 2021 | 2020 | 2021 | 2020 | ||||
| Salaries and wages (i) | 3,023 | 1,753 | 1,098 | 649 | ||||
| Marketing expenses (ii) | 401 | 269 | 157 | 90 | ||||
| Total Sales and marketing expenses | **** | 3,424 | **** | 2,022 | **** | 1,255 | **** | 739 |
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| General and administrative expenses | 2021 | 2020 | 2021 | 2020 | ||||
| Salaries and wages (iii) | 16,151 | 11,263 | 6,230 | 1,716 | ||||
| Third-party services (iv) | 8,863 | 1,403 | 2,733 | 450 | ||||
| Office expenses (v) | 2,022 | 1,202 | 732 | 422 | ||||
| Amortization and depreciation (vi) | 1,695 | 224 | 791 | 102 | ||||
| Travel and other operating expenses (vii) | 1,349 | 1,570 | 401 | 779 | ||||
| Total General and administrative expenses | **** | 30,080 | **** | 15,662 | **** | 10,887 | **** | 3,469 |
| (i) | Salaries and wages related to Full Time Equivalents (“FTE”) engaged in the Sales and marketing<br>department of the Group. For further detail on total salaries and wages refer to Note 9: Employee Benefits. | |||||||
| --- | --- | |||||||
| (ii) | Expenses related to the distribution and production of marketing and advertising, public relations expenses,<br>commissions to third-party sales force and partners and expenses incurred in relation to trade marketing at events. | |||||||
| --- | --- | |||||||
| (iii) | Salaries and wages related to administrative FTEs. For further detail on total salaries and wages refer to Note<br>9: Employee Benefits. | |||||||
| --- | --- | |||||||
| (iv) | This includes Advisors’ fees, Legal fees, Auditors’ fees and Human resources’ fees. Third-party<br>services, for the nine-month period ended September 30, 2021, also include USD 4,442 of Secondary offering expenses and USD 665 of Transaction costs. | |||||||
| --- | --- | |||||||
| (v) | Consist of office rent and related expenses. | |||||||
| --- | --- | |||||||
| (vi) | Corresponds to amortization of<br>right-of-use assets as well as depreciation of property, plant and equipment. For further detail on total amortization and depreciation charges refer to Note 10:<br>Amortization and Depreciation. | |||||||
| --- | --- | |||||||
| (vii) | This mainly includes expenses related to bank charges, taxes and other operating expenses.<br> | |||||||
| --- | --- |
9. Employee Benefits
As of September 30, 2021, the Group’s FTEs were 532 (260 as of September 30, 2020) where 39% corresponded to information technology and product engineers and related roles (40% for the nine-month period ended September 30, 2020).
Employee benefits is composed of the following:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Salaries, wages and contractor fees (i) | 19,858 | 7,203 | 7,504 | 2,808 | ||||
| Share-based payments (ii) | 5,354 | 7,039 | 2,673 | 106 | ||||
| Total employee benefits | **** | 25,212 | **** | 14,242 | **** | 10,177 | **** | 2,914 |
| (i) | Salaries, wages and contractor fees include social security costs as well as annual bonuses compensations. This<br>line also includes USD 4,704 in the nine-month period ended September 30, 2021 (USD 1,699 in the nine-month period ended September 30, 2020) related to capitalized salaries and wages. | |||||||
| --- | --- | |||||||
| (ii) | The share-based payments relate to equity-settled compensation expenses, net of forfeitures if any. For further<br>information refer to Note 2.2: Share-based payments. | |||||||
| --- | --- |
F-15
10. Amortization and Depreciation
Amortization and depreciation expenses are composed of the following:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Amortization of intangible assets | 2,594 | 520 | 1,115 | 180 | ||||
| Right-of-use asset<br>amortization | 337 | 128 | 129 | 45 | ||||
| Depreciation of Property, plant & equipment | 309 | 96 | 137 | 57 | ||||
| Total Amortization and Depreciation | **** | 3,240 | **** | 744 | **** | 1,381 | **** | 282 |
For further information related to amortization of intangible assets refer to Note 17: Intangible Assets.
11. Income Tax
Income tax expense is recognized based on management’s estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average income tax rate used for the nine-month period ended September 30, 2021 is 9.2%, compared to 11.9% for the nine-month period ended September 30, 2020.
The income tax charge recognized in profit and losses is the following:
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current Income Tax | 2021 | 2020 | 2021 | 2020 | ||||||||
| Current Income Tax on profits for the year | (5,173 | ) | (2,236 | ) | (2,723 | ) | (899 | ) | ||||
| Total Current Income Tax expense | **** | (5,173 | ) | **** | (2,236 | ) | **** | (2,723 | ) | **** | (899 | ) |
| Nine-months endedSeptember 30 | Three-months endedSeptember 30 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Deferred income tax | 2021 | 2020 | 2021 | 2020 | ||||||||
| (Decrease)/Increase in deferred income tax assets | 36 | 5 | 176 | (33 | ) | |||||||
| Increase in deferred income tax liabilities | (396 | ) | — | (11 | ) | — | ||||||
| Total Deferred income tax (expense) / benefit | **** | (360 | ) | **** | 5 | **** | **** | 165 | **** | **** | (33 | ) |
| Income Tax expense | **** | (5,533 | ) | **** | (2,231 | ) | **** | (2,558 | ) | **** | (932 | ) |
12. Capital management
(a) Share capital
F-16
Authorized shares, as well as issued and fully paid-up shares, are presented below:
| September 30, 2021 | September 30, 2020 | ||||||
|---|---|---|---|---|---|---|---|
| Amount | Amount | ||||||
| Authorized Shares of 0.002 U.S. Dollars each | |||||||
| Class A Common Shares | 1,000,000,000 | — | |||||
| Class B Common Shares | 250,000,000 | — | |||||
| Undesignated Shares | 250,000,000 | — | |||||
| Authorized Shares of 1.1211 U.S. Dollars each ** | |||||||
| Common Shares | — | 618,363 | |||||
| **** | 1,500,000,000 | **** | **** | 618,363 | |||
| Issued and Fully Paid Up Shares of 0.002 U.S. Dollars each * | |||||||
| Class A Common Shares | 149,065,490 | 268,598,000 | |||||
| Class B Common Shares | 145,962,951 | — | |||||
| **** | 295,028,441 | **** | **** | 268,598,000 | |||
| Share Capital evolution * | |||||||
| Share Capital as of January 1 | 268,598,000 | 268,598,000 | |||||
| i) Issue of ordinary shares (pre-IPO) | 19,906,000 | — | |||||
| ii) Par value change | — | ) | — | ||||
| iii) Issue of ordinary shares at the IPO | 4,411,765 | — | |||||
| iv) Warrant exercise | 2,112,676 | — | |||||
| Share Capital as of September 30 | **** | 295,028,441 | **** | **** | 268,598,000 |
All values are in US Dollars.
| * | Retroactively adjusted to reflect the effect of the stock split (Note 1). |
|---|---|
| ** | Amounts do not reflect the effect of the stock split explained in Note 1. |
| --- | --- |
The rights of the holders of Class A Common Shares and Class B Common Shares are identical, except with respect to voting, conversion and transfer restrictions applicable to the Class B Common Shares. Each Class A Common Share is entitled to one vote while Class B Common Shares are entitled to five votes each. Each Class B Common Share is convertible into one Class A Common Share automatically upon transfer, subject to certain exceptions. Holders of Class A Common Shares and Class B Common Shares vote together as a single class on all matters unless otherwise required by law.
| i) | For the nine-month period ended September 30, 2021 and prior to the IPO date (June 3, 2021) dLocal issued<br>19,906,000 new Class A Common Shares receiving total proceeds of USD 63,177, according to the following details: i) 15,640,000 shares related to the exercise of share-options where dLocal received payments for USD 31,678; ii) 45,000 shares<br>related to the exercise of share-options where dLocal received payments for USD 98; and iii) 4,221,000 shares, issued on March 3^rd^, 2021, where dLocal received payments for USD 31,401.<br> |
|---|---|
| ii) | On April 14, 2021 existing shareholders of dLocal Group Limited contributed the outstanding shares, with par<br>value of 1.1211 U.S. Dollars, to dLocal, and received the same number of shares with par value of 1 U.S. Dollars. |
| --- | --- |
| iii) | On June 3, 2021 the following transactions took place related to the Group’s IPO: i) the Group made a<br>500-for-1 share split where the shareholders of dLocal exchanged 577,008 shares with par value of 1 U.S. Dollars for 288,504,000 shares of par value 0.002 U.S. Dollars<br>of the same entity; ii) 4,411,765 shares were issued as part of the initial public offering where dLocal received a payment, net of issuance costs, of USD 86,450 based on a market price of 21.0 U.S. Dollars per share. |
| --- | --- |
| iv) | On September 2, 2021 a holder of warrants exercised its net issuance right resulting in a net issuance on<br>September 7, 2021 of 2,112,676 shares at a Fair Market Value of U.S. Dollars 65.14 per share, calculated using the average price of 5 business days before the exercise date. |
| --- | --- |
F-17
(b) Capital reserve
The Capital reserve corresponds to reserves related to the share-based plans, as described in Note 2.11: Share-based payments and warrants. Accordingly, this reserve is related to share-based payment compensation plans of the Group.
The following table shows a breakdown of the consolidated statement of financial position line item ‘Capital Reserves’ and the movements in these reserves during the periods.
| 2021 | 2020 | ||||
|---|---|---|---|---|---|
| Balance as of January 1 | **** | 12,582 | **** | **** | 5,287 |
| Share-options exercise (i) | (6,898 | ) | — | ||
| Share-based payments charges | 5,360 | 7,039 | |||
| Forfeitures | (6 | ) | — | ||
| Warrant exercise | (533 | ) | — | ||
| Balance as of September 30 | **** | 10,505 | **** | **** | 12,326 |
| (i) | During the nine-month period ended September 30, 2021, a total of 15,685,000 share-options under the<br>share-based payments plan were exercised. Consequently, the correspondent charge to Capital reserve was recycled into the Share premium line item within equity. | ||||
| --- | --- |
(c) Other Reserves
The reserves for the Group relate to cumulative translation adjustment representing differences on conversion of assets and liabilities at the reporting date.
The following table shows a breakdown of the consolidated statement of financial position line item ‘Other Reserves’ and the movements in these reserves during the periods.
| 2021 | 2020 | ||||
|---|---|---|---|---|---|
| Cumulativetranslationadjustment | Cumulativetranslationadjustment | ||||
| Balance as of January 1 | **** | 119 | **** | 14 | **** |
| Movement of reserves | 304 | (516 | ) | ||
| Balance as of September 30 | **** | 423 | **** | (502 | ) |
(d) Retained Earnings
Movements in retained earnings were as follows:
| 2021 | 2020 | ||||
|---|---|---|---|---|---|
| Balance as of January 1 | **** | 31,749 | **** | 18,460 | **** |
| Comprehensive income for the period | 54,455 | 16,547 | |||
| Transaction between shareholders | — | 163 | |||
| Distribution of retained earnings | — | (15,000 | ) | ||
| Balance as of September 30 | **** | 86,204 | **** | 20,170 | **** |
(e) Earnings per share
dLocal calculates basic earnings per share by dividing the profit attributable to equity holders by the weighted average number of common shares issued and outstanding during the nine-months and three-months periods ended September 30, 2021 and 2020.
F-18
For diluted earnings per share is calculated by dividing the profit attributable to equity holders of dLocal by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all dilutive potential common shares into common shares.
The next table presents the information used as base for such calculation:
| For the nine-month period endedSeptember 30 | For the three-month period endedSeptember 30 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Profit attributable to equity shareholders (U.S. Dollars) | 54,291,000 | 16,586,000 | 19,663,000 | 8,622,000 | ||||
| Weighted average number of common shares * | 284,456,779 | 268,598,000 | 293,558,997 | 268,598,000 | ||||
| Adjustments for calculation of diluted earnings per share * (1) | 19,609,500 | 13,544,500 | 19,646,000 | 12,964,000 | ||||
| Weighted average number of ordinary shares for calculating diluted earnings per share * | 304,066,279 | 282,142,500 | 313,204,997 | 281,562,000 | ||||
| Basic earnings per share | 0.19 | 0.06 | 0.07 | 0.03 | ||||
| Diluted earnings per share | 0.18 | 0.06 | 0.06 | 0.03 | ||||
| * | Retroactively adjusted to reflect the effect of the stock split (Note 1) | |||||||
| --- | --- | |||||||
| ^1^ | For the nine-month period ended September 30, 2021, the adjustment corresponds to the dilutive effect of<br>i) USD 16,209 average shares related to share-based payment warrants; and ii) USD 3,401 average shares related to share-based payment plans with employees (USD 13,356 and USD189 respectively for the nine-month period ended September 30, 2020).<br>For the three-month period ended September 30, 2021 corresponds to the dilutive effect of i) USD 16,456 average shares related to share-based payment warrants; and ii) USD 3,190 average shares related to share-based payment plans with employees<br>(USD 12,788 and USD 177 respectively for the three-month period ended September 30, 2020). | |||||||
| --- | --- |
13. Asset acquisition
On March 11, 2021, with effective date April 1, 2021, dLocal signed a contract to acquire certain assets from Primeiropay S.A.R.L and PrimeiroPay Technology GmbH (“Primeiropay”) in accordance with the Transfer of a Going Concern Agreement (“the Agreement”) signed between the parties, for a consideration of USD 40.0 million, of which USD 1.33 million is contingent consideration (subject to the achievement of the “earn-out”) and USD 38.67 million was an immediate cash consideration, with an effective date of April 1, 2021. According to management’s estimates, the contingent consideration will be paid during the following 6 months.
Primeiropay is an international payment service provider that delivers payment services for international merchants that want to accept payments from their international customers without setting up a local entity through processing all cards and payment methods domestically in local currencies. The asset acquisition is expected to increase the Group’s market share through the incorporation of new global merchants processing payments in emerging markets. Details of the purchase consideration are as follows:
| Purchase consideration | |
|---|---|
| Cash Paid | |
| Contingent Consideration at fair value | |
| Total Purchase Consideration |
All values are in US Dollars.
The Group applied the concentration test detailed on Paragraph B7B of IFRS 3 – Business Combinations, to assess whether the acquired set of activities and assets were or not a business. The concentration test was met since substantially all the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets (i.e. intangible assets related to merchant agreements) and the intellectual property that is attached to them. Consequently, the transaction was classified as an asset acquisition, outside of the scope of IFRS 3 (Paragraph 2b).
F-19
Recognition of assets acquired
On April 1^st^, 2021 the Group recognized the assets acquired (mainly merchant agreements) as a single intangible asset in accordance with IAS 38 – Intangible Assets. The Group estimated the amortization period for such single intangible asset to be 18.75 years.
14. Cash and cash equivalents
Cash and cash equivalents breakdown is presented below:
| September 30,2021 | December 31,2020 | |||
|---|---|---|---|---|
| Own Balances | 187,681 | 43,684 | ||
| Merchant Clients Funds | 105,374 | 68,049 | ||
| **** | 293,055 | **** | 111,733 |
As of September 30, 2021, USD 293,055 (USD 111,733 on December 31, 2020) represents cash on hand, demand deposits with financial institutions and other short-term liquid financial instruments.
Own Balances correspond to cash and cash equivalents of the Group while Merchant Clients Funds correspond to freely available funds collected from the merchants’ customers, that can be invested in secure, liquid low-risk assets until they are transferred to the merchants in accordance with the agreed conditions with them or transferred to Own Funds accounts for the portion that corresponds to the Group fees.
15. Trade andother receivables
Trade and Other Receivables of the Group are composed of the following:
| September 30,2021 | December 31,2020 | |||||
|---|---|---|---|---|---|---|
| Trade receivables | 149,862 | 67,553 | ||||
| Loss allowance | (297 | ) | (341 | ) | ||
| Trade receivables net | 149,565 | 67,212 | ||||
| Advances and other receivables | 18,035 | 5,573 | ||||
| **** | 167,600 | **** | **** | 72,785 | **** |
Trade Receivables correspond to uncollateralized gross amounts due from acquirers, processors, merchants and preferred suppliers for services performed that will be collected in less than one year, so they are classified as current. No financial assets are past-due and all Trade and other receivables are categorized as within “normal” credit risk rating.
Loss allowance and impairment losses
The following table presents the evolution of the loss allowance:
| 2021 | 2020 | |||||
|---|---|---|---|---|---|---|
| Total as of January 1 | **** | (341 | ) | **** | (807 | ) |
| Decrease **/ (**Increase) in loss allowance for trade receivables | (8 | ) | 511 | |||
| Write-offs | 52 | — | ||||
| Total as of September 30 | **** | (297 | ) | **** | (296 | ) |
| Net impairment (loss)/gain on financial assets (i) | **** | (8 | ) | **** | 853 | **** |
| (i) | 2020 includes a write-off reversal of USD 342 charged directly to the<br>Statement of Comprehensive Income related to Trade receivables. | |||||
| --- | --- |
F-20
Initial recognition and subsequent measurement the Group applies the simplified approach to determine expected credit losses on trade receivables.
To measure the expected credit losses, trade and other receivables have been grouped based on shared credit risk characteristics and the days past due (only 0-30 past due bucket as of September 30, 2021 and December 31, 2020).
The expected loss rates are based on the payment profiles of debtors over a period of 36 months before year end and the corresponding historical credit losses experienced within this period. The historical loss rate is adjusted
to reflect current and forward-looking information on credit risk ratings of the countries in which the Group sells its services which affects the ability of the debtors to settle the receivables. On that basis, the average expected credit loss rate of the 0-30 past due bucket was determined at 0.1% for the nine-month period ended September 30, 2021 (0.5% in the nine-month period ended September 30, 2020).
16. OtherAssets
Other assets are composed of the following:
| September 30,2021 | December 31,2020 | |||
|---|---|---|---|---|
| Current | ||||
| Money held in escrow for: (i) | 1,072 | 1,070 | ||
| - Payment Processing Service Agreements | 861 | 859 | ||
| - Requirements for other processors | 80 | 80 | ||
| - Credit card requirements | 131 | 131 | ||
| Rental guarantees | 210 | 95 | ||
| Capitalized transaction costs (ii) | — | 302 | ||
| Prepaid assets (iii) | 543 | 550 | ||
| Total current Other Assets | **** | 1,825 | **** | 2,017 |
| Non-current | ||||
| Prepaid assets (iii) | — | 143 | ||
| Total non-current Other Assets | **** | — | **** | 143 |
| (i) | Comprises money held in escrow in order to constitute a fund required by processors. | |||
| --- | --- | |||
| (ii) | Corresponds to prepaid costs related to a potential offering process, only associated to primary offering<br>costs. | |||
| --- | --- | |||
| (iii) | In 2020 the Group signed with a Merchant a letter of agreement (the “Agreement”) where the Group<br>agreed to pay USD 400 to the Merchant in exchange of a minimum amount of revenue in the period between August 24^th^, 2020 and September 30^th^,<br>2022. During the nine-month period ended September 30, 2021 this asset was reduced in USD 150 and accounted for as a reduction of revenues (USD 17 in year 2020). Additionally, the Group signed an agreement with another Merchant where the Group<br>agreed to pay USD 360 to the Merchant in exchange of a minimum amount of revenue during 2021 and for being retained as the provider of at least the 90% of the transacted volume in all markets where dLocal offers a complete payment solution in the<br>same. Such agreement was already paid in 2021 and included within “Prepaid Assets”. | |||
| --- | --- | |||
| (iv) | See Note 13: Asset acquisition. | |||
| --- | --- |
F-21
17. Intangible Assets
Intangible assets of the Group correspond to acquired software as well as to capitalized expenses related to internally generated software and are stated at cost less accumulated amortization.
| Internallygeneratedsoftware | 2021<br><br><br>Acquiredintangibleasset * | Total | 2020<br><br><br>Internallygeneratedsoftware | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At January 1 | ||||||||||||
| Cost | 4,987 | — | 4,987 | 1,983 | ||||||||
| Accumulated amortization | (834 | ) | — | (834 | ) | (180 | ) | |||||
| Net book amount | **** | 4,153 | **** | **** | — | **** | **** | 4,153 | **** | **** | 1,803 | **** |
| Period ended September 30 | ||||||||||||
| Opening book amount | 4,153 | — | 4,153 | 1,803 | ||||||||
| Additions (i) | 4,905 | — | 4,905 | 2,394 | ||||||||
| Asset acquisition (Note 13) | — | 39,335 | 39,335 | — | ||||||||
| Amortization of the period | (1,545 | ) | (1,049 | ) | (2,594 | ) | (520 | ) | ||||
| Closing book amount | **** | 7,513 | **** | **** | 38,286 | **** | **** | 45,799 | **** | **** | 3,677 | **** |
| As ofSeptember 30,2021 | As ofDecember 31,2020 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| Cost | 49,227 | 4,989 | ||||||||||
| Accumulated amortization | (3,428 | ) | (836 | ) | ||||||||
| Net book amount | **** | 45,799 | **** | **** | 4,153 | **** | ||||||
| * | Refer to Note 13: Asset acquisition. | |||||||||||
| --- | --- | |||||||||||
| (i) | The additions of the nine-month period ended September 30, 2021 include USD 4,704 related to capitalized<br>salaries and wages (USD 1,699 as of September 30, 2020). | |||||||||||
| --- | --- |
As of September 30, 2021, and December 31^st^, 2020 no indicator of impairment related to intangible assets existed, so the Group did not perform an impairment test.
18. Trade and other payables
Trade and Other Payables are composed of the following:
| September 30,2021 | December 31,2020 | |||
|---|---|---|---|---|
| Trade Payables | 231,472 | 136,727 | ||
| Accrued Liabilities | 3,793 | 2,928 | ||
| Other Payables | 9,211 | 3,210 | ||
| Total Trade and other payables | **** | 244,476 | **** | 142,865 |
These payables are classified as current liabilities as the payment is due within one year or less. Moreover, the carrying amounts are considered to be the same as fair values, due to their short – term nature.
F-22
Trade Payables correspond to liabilities with Merchants, either related to payin transactions processed or payout transactions to be processed at their request. Accrued Liabilities mainly correspond to obligations with legal and tax advisors, and auditors. Other Payables mainly correspond to obligations related to processors´ costs and the acquisitions of office goods and services necessary for the ordinary course of the business.
19. Tax Liabilities
The tax liabilities breakdown is as follows:
| September 30,2021 | December 31,2020 | |||
|---|---|---|---|---|
| Income tax payable | 2,018 | 1,911 | ||
| Other tax liabilities | 6,724 | 5,877 | ||
| Income tax withholdings | 4,011 | 3,343 | ||
| Digital services VAT withholding | 1,949 | 1,579 | ||
| Other Taxes | 764 | 955 | ||
| Total Tax Liabilities | **** | 8,742 | **** | 7,788 |
20. Derivative financial instruments
As of the beginning of the nine-month period of these Consolidated Condensed Interim Financial Statements, dLocal Limited had an option agreement in place with one shareholder (“Investor”), pursuant to which the Investor had outstanding options to purchase up to 18,068,000 common shares from certain existing shareholders, or by direct issuance of Company shares, which could be exercised by the Investor on or before December 16, 2021.
In March 3, 2021, the investor exercised the right to purchase 18,068,000 Class A Ordinary shares in dLocal Group Limited, by acquiring them from other existing shareholders, without being required the issuance of new shares by dLocal. In this sense, as of March 3, 2021 the obligations of dLocal under this agreement have ceased.
Considering that as of December 31, 2020 the derivative financial instrument represented a liability for dLocal of USD 2,896, a gain for the same amount was recognized within Operating profit in the line item “Other operating gain/(loss)” in the Consolidated Condensed Interim Statements of Comprehensive Income for the nine-month period ended September 30, 2021.
21. Provisions
(a) Current or potential proceedings
Provisions for the period are related to current or potential proceedings where the management understands, based on the Group’s legal advisors’ assessment, that it is more likely than not that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
(b) Movements in current or potential proceedings
Movements in current or potential proceedings are set out below:
| 2021 | 2020 | |||
|---|---|---|---|---|
| Carrying amount as of January 1 | **** | 1,393 | **** | 798 |
| Additional charge to current or potential proceedings | 1,016 | 148 | ||
| Carrying amount as of September 30 | **** | 2,409 | **** | 946 |
F-23
22. Related parties
(a) Related Party Transactions
Related party transactions are linked to the options agreement that is reflected presented in Note 20 of these financial statement.
(b) Key Management compensation
The compensation of the Executive Team during the period can be analysed as follows:
| Nine<br>months toSeptember 30,2021 | Nine<br>months toSeptember 30,2020 | Three<br>months toSeptember 30,2021 | Three<br>months toSeptember 30,2020 | |||||
|---|---|---|---|---|---|---|---|---|
| Short-term employee benefits – salaries and wages | 1,527 | 524 | 406 | 162 | ||||
| Long-term employee benefits – share-based payment | 4,789 | 7,039 | 2,673 | 106 | ||||
| **** | 6,316 | **** | 7,563 | **** | 3,079 | **** | 268 |
(c) Transactions with other related parties
The following transactions occurred with related parties:
| Nine<br>months toSeptember 30,2021 | Nine<br>months toSeptember 30,2020 | Three<br>months toSeptember 30,2021 | Three<br>months toSeptember 30,2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Transactions with merchants – revenues | 1,177 | 1,328 | 351 | 811 | ||||||||
| Transactions with preferred suppliers (Collection agents) – costs | (232 | ) | (315 | ) | (112 | ) | (111 | ) |
(d) Outstanding balances arising from transactions with other related parties
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
| September 30,2021 | December 31,2020 | |||||
|---|---|---|---|---|---|---|
| Merchants – accounts payable | (632 | ) | (598 | ) | ||
| Preferred suppliers (Collection agents) – accounts payable | (40 | ) | (39 | ) | ||
| Preferred suppliers (Collection agents) – accounts receivable | 3,210 | 506 |
All transactions with related parties were made on normal commercial terms and conditions and at market rates. Outstanding balances are unsecured and are repayable in cash.
23. Fair value hierarchy
The following tables show financial instruments recognized at fair value for the period ended September 30, 2021 and December 31, 2020, analyzed between those whose fair value is based on:
| • | Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.<br> |
|---|---|
| • | Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value<br>are observable, either directly or indirectly. |
| --- | --- |
| • | Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not<br>based upon observable market data. |
| --- | --- |
F-24
The table also includes financial instruments measured at amortized cost. The Group understands that the book value of such instruments approximates their fair value.
| September 30, 2021 | FVPL | Amortizedcost | Total | Level 1 | Level 2 | Level 3 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||||||
| Financial Assets at Fair Value through Profit or Loss | 1,066 | — | 1,066 | 1,066 | — | — | ||||||||||
| Other Assets | — | 1,825 | 1,825 | — | — | — | ||||||||||
| Trade and Other Receivables | — | 167,600 | 167,600 | — | — | — | ||||||||||
| Cash and Cash Equivalents | — | 293,055 | 293,055 | — | — | — | ||||||||||
| **** | 1,066 | **** | 462,480 | **** | 463,546 | **** | 1,066 | **** | — | **** | — | |||||
| December 31, 2020 | FVPL | Amortizedcost | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| Assets | ||||||||||||||||
| Financial Assets at Fair Value through Profit or Loss | 8,319 | — | 8,319 | 8,319 | — | — | ||||||||||
| Other Assets | — | 2,017 | 2,017 | — | — | — | ||||||||||
| Trade and Other Receivables | — | 72,785 | 72,785 | — | — | — | ||||||||||
| Cash and Cash Equivalents | — | 111,733 | 111,733 | — | — | — | ||||||||||
| **** | 8,319 | **** | 186,535 | **** | 194,854 | **** | 8,319 | **** | — | **** | — | |||||
| September 30, 2021 | FVPL | Amortizedcost | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Liabilities | ||||||||||||||||
| Trade and Other Payables | — | (244,476 | ) | (244,476 | ) | — | — | — | ||||||||
| Contingent consideration liability | (665 | ) | — | (665 | ) | — | — | (665 | ) | |||||||
| **** | (665 | ) | (244,476 | ) | (245,141 | ) | — | **** | — | **** | (665 | ) | ||||
| December 31, 2020 | FVPL | Amortizedcost | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Liabilities | ||||||||||||||||
| Trade and Other Payables | — | (142,865 | ) | (142,865 | ) | — | — | — | ||||||||
| Derivative financial instruments | (2,896 | ) | — | (2,896 | ) | — | (2,896 | ) | — | |||||||
| **** | (2,896 | ) | **** | (142,865 | ) | **** | (145,761 | ) | **** | — | **** | (2,896 | ) | **** | — |
Level 3 Financial Instruments
As of September 30, 2021, the Group has recognized a contingent consideration liability, described in Note 13, amounting to USD 665, classified in Level 3. The amount of the Level 3 contingent consideration was calculated by the finance team of the Group, using a discounted cash flow analysis, considering the expected cash flows based on terms of the contract, the entity’s knowledge of the business and how the current conditions are likely to impact it.
There were no changes in level 3 items for the periods ended September 30, 2021 and December 31, 2020. Also, there were no transfer of items between level 2 and level 3, acquisitions, disposals nor gains or losses recognized in profit for the period related to level 3 instruments.
F-25
24. Subsequent events
Secondary offering
On October 25, 2021 the Company announced the closing of an underwritten public offering of 17,000,000 Class A common shares which were sold by certain selling shareholders at a public offering price of USD 52.25 per share. The offering was made pursuant to a registration statement on Form F-1 filed with the U.S. Securities and Exchange Commission (“SEC”). This public offering was secondary for which the Company did not receive any cash in exchange of shares.
In connection with the offering, the selling shareholders have granted the underwriters the option to purchase up to 2,550,000 additional Class A common shares at the public offering price less the underwriting discounts and commissions.
F-26