Exhibit 99.2

DLocal Limited

Unaudited Condensed Consolidated Interim 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 September 30								Three-months ended September 30
		Notes				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 USD)
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

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 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				Member Contributed Capital				Share Capital				Share Premium				Capital Reserve				Other Reserves				Retained Earnings				Total				Non-controlling interest				Total equity
Balance as of January 1st, 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 30th, 2021							—				590				157,151				10,505				423				86,204				254,873				18				254,891
Balance as of January 1st, 2020							602				—				—				5,287				14				18,460				24,363				166				24,529
Adjustments due to reorganizations							(602	)			602				—				—				—				—				—				—				—
Adjusted balance as of January 1st, 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 30th, 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 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) Warrant exercise

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 the Consolidated Condensed Interim Financial Statements and significant accounting policies

2.1. Basis of preparation of consolidated condensed interim financial 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 exercise price per share option (U.S. Dollars)				Number of options and RSUs				Average exercise price per share option (U.S. Dollars)				Number 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. Dollars per A Share)				Share options and RSUs September 30, 2021				Share options and RSUs December 31, 2020
August 1st, 2018			3 years			August 1st, 2021			0.74				90,500				271,500
October 1st, 2019			3 years			October 1st, 2022			2.18				90,000				135,000
January 31st, 2020			Less than 1 year			December 31st, 2024			2.04				—				15,459,000
August 24th, 2020			5 years			August 24th, 2025			3.30				835,000				835,000
November 15th, 2020			4 years			November 15th, 2024			4.15				135,000				135,000
November 23rd, 2020			5 years			November 23rd, 2025			3.88				525,500				525,500
January 1st, 2021			5 years			January 1st, 2026			3.88				210,000				—
March 1st, 2021			1 year			March 1st, 2022			0.002				5,500	**			—
March 2nd, 2021			5 years			March 2nd, 2026			7.44				10,000				—
March 11th, 2021			5 years			March 11th, 2026			0.002				1,031,000	**			—
March 11th, 2021			5 years			March 11th, 2026			7.44				36,000				—
March 12nd, 2021			5 years			March 12nd, 2026			7.44				7,000				—
March 15th, 2021			5 years			March 15th, 2026			7.44				7,500				—
March 29th, 2021			5 years			March 29th, 2026			7.44				10,000				—
May 11th, 2021			5 years			May 11th, 2026			7.44				927,500				—
May 11th, 2021			3 years			May 11th, 2024			0.002				22,500	**			—
May 18th, 2021			5 years			May 18th, 2026			16.17				10,000				—
Total													3,953,000				17,361,000
Weighted average remaining contractual life of restricted share units and share 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 on financial 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 to employees

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.

 

•

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 comparable shares listed on Nasdaq.

 

b)

average exercise price*: 3.69 U.S. Dollars

 

c)

grant date: January 1st, February 25th, March 2nd, March 11th, March 12nd, March 15th, March 29th, May 11th and May 18th of the year, 2021.

 

d)

expiry date: January 1st, 2026, 2026, February 25th, 2026, March 2nd, 2026, March 11th, 2026, March 12nd, 2026, March 15th, 2026, March 29th, 2026, May 11st, 2026, May 11st, 2024 and May 18th, 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 comparable shares listed on Nasdaq.

 

i)

average exercise price*: 2.10 U.S. Dollars

 

j)

grant date: January 31st and August 24th of the year 2020

 

k)

expiry date: December 31st, 2024 and August 24th 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 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 ended September 30								Three-months ended September 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 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.

(ii)	Corresponds to costs related to the acquisition of assets of Primeiropay as more fully explained in Note 13: 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 ended September 30								Three-months ended September 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 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.

(ii)	Other revenues are mainly comprised of minor fees, such as initial setup fees, installment fee, minimum monthly 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 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 ended September 30								Three-months ended September 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 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 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., 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 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 ended September 30								Three-months ended September 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 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 of the platform.

(iii)

Corresponds to information technology costs to support our infrastructure and back-office operations.

(iv)	Comprises expenses of overall monitoring and security of our network and platform.

 

F-14