Uruguay fintech dLocal to 'pause' rapid expansion, strengthen operations -CEO

By Jorgelina do Rosario and Lucinda Elliott

LONDON, Sept 27 (Reuters) - Uruguay digital payments company dLocal Ltd will pause its expansion plans and focus on strengthening existing operations in over 40 countries, co-CEO Pedro Arnt told Reuters on Wednesday, hinting at a new phase for the fast-growing firm.

Founded in 2016, dLocal operates from Latin America to Asia and Africa and has expanded rapidly since then, but over the last year has grappled with challenges including a damaging short-seller report and scrutiny on its business in Argentina.

Arnt was brought on in August to help steady the ship, which helped boost the shares, though they are down around 75% from a peak in 2021 when the company first listed. There is growing criticism among the investment community that the firm has grown too quickly, entering markets where management lacks experience.

"We think this is now a phase to pause and to strengthen our operations," Arnt told Reuters in an interview in London, adding that markets like Nigeria, South Africa and Egypt were showing strong growth.

"We could add a few (countries) if there are specific requests," he said, adding that the business "had grown extremely fast" and so there was "a lot of company building that still needs to be done."

DLocal offers cross-border payment solutions to companies it says include Amazon.com, Meta Platforms and Netflix.

Shares of dLocal surged after Arnt joined following more than two decades at regional e-commerce giant MercadoLibre. dLocal had previously been hit by allegations from hedge fund Muddy Waters that its books showed numerous discrepancies and also a probe in Argentina for funds transferred abroad.

"The company has been through two independent investigations. And I think it's safe to say that the allegations in the short (sellers) report simply were not accurate," Arnt said. On the Argentina probe, he said that for now "there are absolutely no conclusions that have emerged."

"The customers' confidence was never lost. We lost zero merchants and that to me is the strongest test."

Arnt told Reuters that he bought Class A common shares when joining the company as his compensation is equity-related, though he declined to disclose the figure.

Arnt declined to comment on whether dLocal is aiming for an M&A operation following speculation in August of a possible sale of the company. The company confirmed its annual revenue forecast of between $620 million and $640 million. (Reporting by Jorgelina do Rosario in London and Lucinda Elliott in Montevideo)