Q2 2022 Dlocal Ltd Earnings Call
Good day and thank you for standing by welcome to the local second quarter 2022 results Conference call.
At this time all participants are in a listen only mode.
This presentation, there will be a question and answer session to ask a question during that session you will need to press star one one on your phone.
Please be advised that today's conference is being recorded and I would now like to handle conference over to your speaker today Ms.
So the debt nacre head of Investor Relations Ms. Nagel. Please go ahead.
Thank you good morning, everyone and welcome to the Loco second quarter 2022 earnings call on the call today, I'm joined by Sebastian kind, albeit our chief executive.
Peter a couple of things that our breakeven and they hook up at Ada Tonight, Our Chief Financial Officer.
We are providing a slide presentation to accompany our prepared remarks.
This event is being broadcast live via webcast and both the webcast and presentation may be accessed through local websites in desktop that the local dot com.
The replay will be available shortly after eubank is complete.
Before proceeding let me mention that any forward statements included in the presentation.
Later on in this conference call are based on currently available information and the local current assumptions expectations and projections about future events.
While the company believes that Samsung expectation and predict are reasonable in view of currently available information you are cautioned not to place undue reliance on those program looking statement.
Actual results may differ materially from those included in the local person based on or discussed in this conference call for the priority of Freestone.
Including those described in the forward looking statement and we expect third section of the local filings within the Securities and exchange.
Commissions, which are available on the local investor relation website.
Now I will turn the conference over to Sarah Thank you.
Hello, everyone. Thanks for joining us today second.
Second quarter 2022 marked our first anniversary as a public company.
During the past year, we have proven that going public was just the beginning of a new chapter.
We continue to build the best financial infrastructure to connect the emerging markets to the rest of the world, making our services available in 37 countries and offering more than 700 local paid member.
Our merchants baidu the convenience of a one stop shop solution on this.
It gives us an immense opportunity to continuous scaling with our customers' increased of our readers and Shreveport, our competitors, we remain humble and focused on providing the most comprehensive solution for our merchants and emerging markets Big Thank you to our global team our customers and our investors for their continued support.
On slide five moving into our second quarter 2022 results I'm happy to say that we've had another quarter of strong results, reaching new records during the quarter <unk>.
Despite the challenging global macro context, including rising interest rates and inflation, our brief discussion on resilience and sustained growth supported by the diversity of our merchants across industry verticals geographies and products.
Our total process volume reached $2 4 billion CQ, two we've achieved a $100 million revenue milestone in the quarter as we continue to bring new merchants to our platform and monetize our existing ones. We saw robust growth in PPV are revenue, increasing by 6700, 72% year over year, respectively. Despite the.
High comparison base from last year.
<unk> PPV on revenue accelerated by 16% quarter over quarter, we continued to retain our clients with a healthy IRR of 167% from Q2 2022, as we grew wallet share with our existing merchants, we continue to operate with the philosophy of delivering disciplined profitable growth.
Adjusted EBITDA was up by 47% year over year, and 16% quarter over quarter to $38 million.
For the fourth consecutive quarter, we maintained our adjusted EBITDA margin stable at 38%.
Our strong performance of the quarter has led us to a combined year over year revenue growth rate plus EBITDA margin of 190%.
On slide six.
We continue to see more merchants joining our platform built on merchants on our platform have grown to more than 500, and we're currently actively manage around 200 key accounts as we add new merchants on scale existing ones. Our revenue share from our merchant has continued to decrease from 63% in Q2, 2021% to 51.
1% in this quarter.
Denmark jumps in second quarter, 2022 were spread across diverse verticals, including right heading commerce streaming other dicing financial services and on demand delivery.
Sides of that our Doctor merchants Barra from quarter to quarter for instance, compared to the second quarter of 2021, there are three different merchants among our top 10, which shows the value of our customer diversification and the strength of our commercial teams. We have built trust with our merchant successfully taking them to in Europe . The chart on the right shows our convenience.
SaaS and bringing our top merchants to more countries as of second quarter 2022, our top their merchants in terms of revenue on a rich process payments without nine countries with a maximum being 17 countries for merchant and a minimum four countries for merchant.
As we offer our services in 37 countries and we keep adding new geographies, we see an immense opportunity to continue scaling our existing customers. Therefore, we remain laser focused on monetizing our existing client base and gaining share of wallet, which we believe is still low across our most relevant customers I will now hand, it over to Michael.
Thanks, Taylor I'm delighted to join you all today from Gabe I'll share more about our expansion plans.
Growing our business outside of Latin America remains a key strategic priority and that's why you're a few months ago I decided to make Philadelphia got by base for the near future. We believe that in the future further diversifying our geographical footprint will strengthen our business as merchants look for a single API in a single integrated.
Rachel walks us multiple emerging markets, including plus growing large markets in Africa and Asia.
We believe that the infrastructure, we are building our growth geographies make us more on partner for our merchants to achieve their own growth objectives.
We are focused on growing with our merchants they grow organically.
Also today 22 out of 37 countries in which we make our services available outside Latin America compared to 16, a year ago and with prospects of opening new countries in these regions in the near future.
We started with one country in Africa.
In 2016, all in Morocco to yourself on.
On <unk>, we call our presence in certain countries in Africa.
Asia, We followed a similar journey and today, we operate in nine.
Our presence in these countries is already a relevant with three countries from Asia and Africa being among our top 10 countries in terms of PPV and gravy.
We have been able to not only add new countries, but also to deepen our presence in the countries, where we currently operate by bringing new merchants on cross selling our it system.
For instance, nine out of our top 10 merger in terms of TBB.
Already processing with us in these regions and we see significant opportunities to continue scaling.
During the last quarter, we continue to enhance our infrastructure our network, adding more than 10, new payment methods in Africa and Asia.
I think new countries and establishing multiple local connections is complex our merchant Bayou the infrastructure our network we have created.
This in turn improves our mode.
We continue to explore selective inorganic opportunities to improve <unk> scale network umbrella across key markets.
Moving on to slide eight we continue to see strong revenue growth across all geographies.
Total revenues.
Increased by 63% year over year to $88 million, our expansion efforts outside Latin America continue to yield solid results as once again, our revenues in Africa and Asia.
Based on the growth in Latam.
Increase in deeper legit by 155% year over year, or a strong 38% quarter over quarter.
Our revenues from Africa, and Asia were $14 million in deepwater cutting accumulated $23 million during the first six months of the year.
As a comparison for the full year 2021, our revenues from Africa, and Asia were $21 million and we are pleased with our Q2 run rate revenues for our business in Africa, and Asia of around $60 million, our share of Africa, and Asia increased to 13% of total revenues and we expect to ship rather than increase over time.
As we continue to cross sell to merchants that originally started the relationship with us in that number.
Besides we continue to see merge of initiating the relationship with us through markets in Africa, and Asia, and then expanding into Latin America.
We continue to invest in expanding our global team responding to the incremental opportunities that we face at the end of Q2 2022, we had 632 employees, increasing by <unk> by 48% or by 205 ftes year over year.
Our chemical cost significantly expanded outside the Americas as we focus on hiring locally to grow faster, reaching 118 FTE is outside of the Americas by the end of June 2022, increasing by $2 one times year over year.
During the year, we grew in all areas with particular focus on take on product sales and marketing and our operations on expansion.
Second related roles, including those out as they become productive continue to represent around 40% of our ft.
<unk> will now review our financial highlights.
Thanks Heiko.
With slide 10, we.
We continue to see strong PBT growth during the quarter.
In Q2, 2022 are TBD reached $2 4 billion.
Increasing by 67% year over year by 16% compared to their first quarter of 2022.
As David highlighted we have a fast growing <unk> business that continues to benefit from diversification.
As you can see the pie chart on the right.
Our business model is not dependent on the performance and outlook of any single industry, but if you got it.
We have mark thus far more than 10 different vertical on every vertical is well balancing our portfolio with no single one accounting for more than 20% of our ppb in Q2 2010 until.
The PPD growth is attributable to the performance and continued growth of our merchandize across most of our costs are sticky.
Currently e-commerce on demand delivery travel software as a service and advertising.
I would also like to highlight that we have experienced growth both in billions and payouts during the quarter.
For <unk>, we have seen a steady increase in DVD quarter after quarter.
Specifically in Q2, 2022, beggings have doubled year over year.
We continue to see improvement in Rps volumes with double digit growth quarter over quarter.
Year over year payoffs experienced mid single digit growth.
As in the second quarter of last year, we saw higher than average volume that came from certain merchants that brand marketing campaigns in that period regarding our cross border that are local to local volumes. The relative contribution has remained stable in the past three quarters, both showing solid growth year over year and quarter over quarter.
Slide 11.
<unk> revenue also reached a new record surpassing for the first time, the $100 million threshold in a quarter.
<unk> grown 72% year over year, a 16% over the first quarter of 2022.
Our revenue solar PV on take rate was four 2% during the quarter stable quarter over quarter are slightly above the <unk>, 1% seen in the second quarter 2021, mainly driven by the change in business mix as <unk> increased our royalty contribution year over year.
So meaning on revenues, we continued delivering strong revenue growth both from our existing and from our new margins.
Revenue from existing merchants.
Are those revenues that are driven by megatrends that we're already processing with us in the same period of last year.
And revenues for pneumatic chunks are those revenues that are driven by Mexico started operating with us after the same period of last year.
During the second quarter of 2022 of the 72% year over year revenue growth, 57% or $33 million came from existing merchants.
Our revenues are extreme maintenance continues to grow from quarter to quarter, reaching $92 million in Q2 2022 more than doubling the $40 million that we achieved in the same period of last year.
Our net revenue retention from the second quarter of 2022 was 167%.
We calculate net revenue retention as our revenue from existing merchants over the total revenue of the same period of last year.
As we commented in previous earnings presentation. The second quarter of 2021 represented in all banks high in terms of revenue and PPD growth and therefore in this quarter to start to have a tougher.
Tougher comparison with last year.
For the full year 2022, we continue to expect our net revenue retention north of 150%.
The remaining 15% year over year revenue growth, our $9 million came from new margins.
This compares to $11 million recorded in the first quarter acquisition in June of $19 million from the same period of 2021.
At our March is typically have a three to six quarters to ramp up period, we believe that revenues from the Americas are just an initial indication of the potential of our new customers.
Moving to slide 12.
Wanted to scale, our gross profit to $50 million in Q2, 2000 trying to up 47% year over year, while experiencing the largest quarter over quarter expansion in the past four quarters, increasing by a solid 14% or $6 million compared to Q1 2022.
Gross margin came in at 49% pretty in line with emerging levels you see it in the second half of 2021 in Q1 2022.
Cost of processing for the quarter represented 2% of our TBD stable quarter over quarter and compared to one 6% a year ago.
The increase versus Q2, 2021 was mainly driven by a change in business makes us <unk>, which have a higher processing cost increased abernethy contribution.
Moving onto our adjusted EBITDA was $38 million for the second quarter of 2022.
<unk> followed the same trend as gross profit increasing by 47% year over year and experiencing the highest quarter over quarter growth in the past four quarters, increasing by a strong 16% or $5 million compared to Q1 2022.
Our adjusted EBITDA margin was 38% in line with our margin in the second half of 2021 and in Q1 2022.
For the full year done something to we continue to expect our adjusted EBITDA margin to remain north of 35%.
If we look at operating expenses for the quarter, excluding onetime and noncash items, we see that they have grown 36% year over year as we expanded our team another more senior members.
In line with our strategy to keep investing in building infrastructure and harvesting long term sustainable growth.
In addition, we increased our travel and in person marketing events as things went back to normal and we also increased third party professional services as part of becoming a public company.
Before handing the call back to set up for the closing remarks, let me say our cash generation on our balance sheet are stronger than ever.
We have continuously delivering positive free cash flow generating $168 million in the last 12 months compared to $99 million for the full year 2021, excluding the <unk> acquisition and $85 million in 2020 with a solid cash conversion of 168% for the last 12 month period.
Our 103% when excluding funds from maritime.
As a result.
June 32022, we have a robust cash position of $554 million.
Which comprises $270 million of own funds and $184 million or merchant plants.
So the philosophy of ours.
Thanks, Neal I would like to conclude by saying that we are very excited about the opportunities that we foresee for the rest of 2022 to continue expanding our financial infrastructure across emerging markets and provide data solutions for our merchants to help them achieve their growth.
As I previously highlighted our business has shown resilience on sustained growth supported by the diversification of our business we.
We have been able to keep delivering high growth in a profitable way, increasing our TPB and revenue by 91%, 90% year over year, respectively. In the first half of 2022 with a strong and a rate of 177% with an adjusted EBITDA margin of 38%.
Our execution capabilities combined with our strong cash generation give us confidence that we are well placed to consolidate our leading position as the online payment solution of choice in emerging markets amid the challenging and uncertain global environment, we do not anticipate that changing our expectations for overall business for 2000.
Thus, we reiterate our expectation of our net retention rate to be at 150 plus level in 2022, and we expect our EBITDA margin for the full year 2020 to be north of 35%.
We will continue to execute with discipline into the massive opportunity ahead of us. We reiterate we are just getting started.
I'll now turn it back to the operator to open it up for questions. Thank you all for listening.
Pleasure being here today.
To ask a question you will need to press star one one on your phone please.
Please standby as we compile the Q&A roster.
Our first question will come from Jason.
Kupferberg Bank of America. Your line is open.
Thanks, guys. Good morning, I, just wanted to pick up on some of that guidance commentary around both NR and adjusted EBITDA margins.
Obviously on both metrics you're trending comfortably ahead of your full year target through the first half of the year. So just wondering if we should expect some some meaningful moderation in both NR and margin in the second half and if so what would drive that or are you just being.
Conservative given some of the macro uncertainty out there. Thank you.
Great. Good morning. Thanks for the question they are targets of the complement.
We've stayed very consistent on this topic from the beginning of the year.
Our expectation of 150% for the full year up 35% plus.
On EBITDA margin, we think thats the right thing to do.
We're very bullish on what we've seen in our business, we're very proud on the quarter, we just posted.
But we think it's there it is.
The right thing to do to stay consistent and continue.
With your expectations of what we've said in the past.
Okay. Okay. So nothing obvious you would call out that we should be wary of in the second half.
So we are to date presenting on our Q2.
It's one we're very proud of and we are happy to discuss we've never been a better company in our history, we're very comfortable saying that we've never had more products, we've never had more geographies.
Never had a better customer relief.
We are building this for the long run on part of being very consistent on the expectations on what we shared with you at having different building for the long term, which is what we want to do we believe the opportunity ahead of us it's massive.
One changing in any short term.
The hiccup that we might find in the future we are very consistent.
And we want to continue to be so.
We are extremely proud of the quarter. We just posted we're extremely proud of the business. We are building and we believe the opportunity ahead of us it's Michael.
That makes sense just to follow up on <unk> in the quarter. It seems like the strength was pretty well balanced among a bunch of your verticals and obviously you continue to benefit from diversification, but was just wondering if you can talk about which parts of the business, maybe lagged a little bit in the quarter in terms of TPB growth I mean, I'm thinking maybe parts of your financial services.
<unk> vertical for example.
The loss history to complement but Jason.
We've shared in the past that we have we are very balanced basket of different industries.
In the Internet economy.
We've seen things like dreaming growing slower than it used to be.
That's not news.
Information you broke you can probably get into the wider market, but the fact that we are very diversified there's always winners and losers we've been through cycles like this in the past.
<unk> started the one you would expect on the Monday Levered travel.
On SaaS on pulse.
Once the cob growth lower RMB on the streaming side.
But again, the fact that we are very well diversified have continued to work with the hedge with.
We've said this in the past, but we're still micro and macro environment. So we still believe that our ability to grow will be very much dependent on our ability to drive value to our customers and bring them to new geographies umbrella.
Okay, well, thank you for the color.
I appreciate it Jason.
Thank you.
One moment please for our next question.
Yes.
Our next question will come from <unk>.
<unk> of HSBC Your line is open.
Hi, Kevin and team. Thank you for taking my question.
Could we dig a bit on the EBITDA margin guide.
Guidance is above 35%.
For the full year it looks like the first half you've been pretty stable at 38%.
Should we expect.
High investments in the second half of the year.
This could lead to compression in EBITDA margin that these investments going to come from more specifically if you can shed some light on that.
Sure. Thanks for the question I'll deal with you what I think.
Sure Hi, Nick how are you doing so.
As you saw in the past four quarters adjusted EBITDA margin has been around 38% very consistent across the board are talking about.
10 basis point increase quarter over quarter.
We raised 75 plus percent for the full year, we don't see any significant change in traffic trends.
But we always want to have the flexibility to invest in person.
And that growth whenever it makes sense for us and so the guidance is still 75, plus one the full year.
Sure.
But if you want we don't see any significant change in trends going forward.
So I just talked about that for the full year, you might come out at around 38% adjusted it could be around 37, 38%.
Thank you.
Welcome.
Sorry, I thought you said if I plan, so we want to have that flexibility.
Don't have any significant change in trends that we are not guiding to 38 or any number of different 35 block.
Okay.
There are no specific investments that we should be mindful off in the second half.
It should lead to necessarily for the margin decline.
Okay.
Nothing different to what we have been doing.
Very focused on our expansion our technology team our sales team those are the main focus of our investments, but nothing very different to what we have been doing the past few months.
Okay. Another question I have is on the cost of services.
Gradually been inching up.
Is it any higher now down 51% of the gross revenues.
A bit higher than what we expected.
Could you give us some color as to why the pick up again this quarter everything related to a change in mix that might have led to a higher cost of those.
Cost of services.
Yeah.
Sorry.
Basically the changed quite a bit of our properties 30 basis points and we consider everybody might not remember that we don't focus.
In percentages, we focus in absolute dollars.
And we incentivize our teams in absolute dollars you can see the increase in gross profit in the quarter quite a bit over the quarter. It was actually $6 million compared to $4 5 million in the previous two quarters. So we are very pleased that you're absolute values the gross profit.
The highest growth in the hospital quarter.
Things like changes of three basis points in a quarter I think that will happen from time to time, we have 47 countries 450 or more merchants.
Any changes in the.
Processes for both Macintosh on countries, mainly five 9 million.
The gross profit of course, Apple now also keep in mind that we launched many countries when we launch and smaller countries. Typically we are stocking at the optimal level of.
Gross profit, but after we launched we continuously that I need to get to those lead optimization. So those smart things may change a little bit the gross profit or cost, but again, we're talking about only three basis points in the quarter.
And in absolute value is the highest growth we've had in the past and the past year.
Okay, let's 50% gross profit margin sounds reasonable and should be at on that.
This led to fluctuate a lot.
Yeah.
So we continue to not optimized for a percentage take rate and I think it's really important to explain the rationale behind that we are building our business for many years based on the dollar amount.
Hopefully going up as rates are higher than our amount for a lower take rate.
We want <unk> to do that we believe the opportunity ahead of US is massive and we shouldn't have called our itself.
So any given.
Revenue certainly given our margin thresholds, we don't think Thats, the right way of dividend the company long term.
We've shared.
These objectives are shared with the team we have them go and get.
More customers to use our infrastructure and do so at a profitable level every dollar in our platform contributed solid margins.
That has always been the case, so while the margin numbers, you mentioned hub being relatively stable in the past we are not optimizing for that.
Our internal goal of Golar folks, who wanted to build a bigger business.
On a gross profit dollar amount because we think that's the right way of building it in the long run.
Understood. Thank you.
Last thing I wanted to check on is the.
The issue in Chile, the litigation that came up do we have any update there.
So neither on visa and Mastercard.
We don't have any significant updates.
Just to get everyone up to speed, both visa and Mastercard are valued partners of ours. We are all in for transparency on making sure that we contribute to the ecosystem.
So far we are stealing a subtle score in Chile.
We are yet to see a final resolution for this.
But we feel very comfort delta both visa and Mastercard are great partners of ours, we'd be in a healthy part of the ecosystem going to win.
That will continue to communicate in the future.
Thank you Kevin.
Yeah.
Thank you.
Thank you.
And again one moment please for.
Next question.
Our next question will come from Igor <unk>.
Your line is open.
Hi, This is Pedro can you hear me.
Yes.
Alright, sorry, Peter Levada from Goldman.
Diego Thank for the call thinking my question.
A couple of questions.
Firstly can you give any color in terms of the mix between 18. The message you talked I think payout that would kind of table that you are growing a lot of pain.
Any color you can give on that in terms of like how much is payout.
In cross border versus local to local.
Just to get some context on how the different payment methods.
Our evolving and also between like alternative payment methods and cards.
Can you give any color on that and then have a second.
Second question.
The other one I think yes.
Yes, sure so Mrs have been very stable.
<unk> remains roughly close to three quarters of the of the total part of the past.
Three quarters I would say.
Local to local east roughly one third of the business and again in the past two quarters those have been very very stable.
<unk> grew mid to high single digits quarter over quarter. So that that is central to what I just said.
I'm sorry was there any other part of your question is in terms of mixes.
And then on the alternative payment methods credit cards in class.
Yes, So let me, let me say goodbye roughly credit card fees.
One third of the business.
And close to 50% of earnings.
Okay perfect. Thank you Diego.
And my second question in terms of the growth, we're seeing in Asia and Africa very strong growth there.
I think on average around nine countries per merchant.
Slide correctly.
Should we expect.
In Africa, we continue to outpace the growth in Latam is there.
This driven.
Yeah.
To go to Asia, and Africa, and then can you give any color on the unit economics between Asia and Africa, Latam I don't know if a.
Different margins.
Maybe a little bit earlier is there upside to margins as you go in those countries.
Thank you.
We lost you for a few seconds on the second half of the question we got on.
The trends in Africa, and APAC, what we've lost a part of the cycle.
The other question would you mind repeating sorry sure no problem.
Any unit economics, you can get between like Asia.
Asia, and Africa, and Latin America, I don't know if like margin. The take rate is there upside as you scale up in those countries.
Sure Craig I'll start feel free to complement.
No.
It's one of those things, where the browser stuff to talk about our business in Africa, and APAC continues to grow really fast.
It was one of our strategic bet.
Having $40 million in a quarter and growing at the 155%. It's definitely something we are extremely proud of.
When we launch a new geography on both your efficacy.
Africa and APAC are newer.
We are not optimized for margin that sounds about right going forward, we want to make sure we are bringing the right customers and we're bringing them in the right countries with healthy unit economics, but we are not optimized the way we are in Latam and we're in some of the markets. We've been live for seven years. So.
The unit economics, there is no fundamental reason why they should be different on the long run obviously on the short term we are less optimized on purpose we are willingly.
Brian you're paying a little bit more on the cost side.
We are going to be paying on a more mature stage, we think thats. The right thing to do on the short term that gives us the ability to build the infrastructure. We know the more scale. We build then we have W deal of getting better conditions from our partner Celgene.
Okay.
Great. Thanks, that's helpful. And then just on the first part in terms of the growth should we expect Asia and Africa continued to outpace Latin America I don't know if you have a target for what percent of revenues should come from.
Those countries or anything like that.
Sure Yes.
Yes.
With here.
Thanks for your question.
So can we expect.
And we expect Africa.
Africa, and Asia to continue outpacing Latam south to remark, how do you get a number that we have shared.
Africa, and Asia have grown 155% year over year.
As compared to 62% year over year in Latin America.
I am being asked regarding Asia revenue wholesale growth.
8% boiler work.
So we're super excited and positive on the growth Africa, and Asia and representing.
We did the company in relation to your the second part of equation, we are not pursuing a particular target.
But we are pursuing all opportunities and we have with our merchants to bring to bring them to the fed.
Great. Thanks for that color and then maybe just one quick follow up on that in terms of the competitive environment. There D. D C.
More opportunities is it more competitive in Latin America.
In terms of things to think about that opportunity and where you fit in versus competitors.
Phil.
Sure.
For sure.
So basically a detail on that.
Each region its price equally.
But the.
The most important part is the value of causing a familiar API for our merchants, while expanding into new geographies is represented by a.
Value added service.
So we see the same trends and opportunities with regard to facilitate international merchants to come to this geography.
So competitive landscape on the on the environment.
It's good for us having the value of having most of the merchant ranked the right things with that.
And Peter just to complement on that.
Some markets in Africa on some geographies in APAC look very much like Latam did when we started the logo.
Youll see fragmentation youll see the clear need on the clear demand for merchants to go into these markets. The other thing that help companies businesses that didn't have a healthier business model our daily struggle, it's regulatory and that's obviously an opportunity for us.
So we're thinking a market like that while we are in.
Businesses that <unk> invested.
<unk>.
Sorry to be without them, but on building how is it the right way and doing so profitably on investing a step by step are going to be able to differentiate.
On a cycle was saying the fact that we are covering not only.
APAC about Africa, Latam will continue to probe differentiate it.
Offering even more than ever in the current environment, where resources for engineers are are in are less available than there used to be in the box.
Yeah.
Okay, great. That's good color. Thank you.
Both.
Thank you.
And again to ask a question. Please press star one one on your phone.
One moment please for our next question.
Our next question will come from Andrew <unk> of SM BC Nico Americas, Inc. Your line is open.
Hey, guys. Thanks for taking my questions just wanted to get a sense of the level of visibility you have within your merchant base and I know one of the challenges with modeling this business has been around.
Really your growth being somewhat dictated by the ambitions of your merchant partners and so as you kind of reach these.
Greater levels of scale within each of these different merchants is there more visibility that they're giving you on what revenue could be shifted over what they plan on pushing through the platform over time.
Andrew Thanks for the question and yes, we do have.
Further we see really as you know we used to have essentially because we have more touch points and we have become a more strategic partner port for our merchant we used to be before.
Years back we would only discuss one country Latin America than the whole of Latin America and now we are discussing the whole emerging market strategies.
Currency benefited beneficial for us.
Our business will continue until they've been on our merchants.
The nature of who we are as a company.
Don't have any dependencies on we don't have any concentrations by industry by merchants.
But the reality is that we are also good at our merchant power and we will we are indexed to their growth that's going to continue to be the case.
To keep track of our of our pipeline, it's in a very healthy position.
We see that the emerging markets continued to be a priority for global companies more.
More than ever the understanding for that be local in those markets.
One of the things we've worked really hard on making sure we have <unk> on our merchant plant.
Or we can plan accordingly, keep in mind that drives a lot of our product strategy, we want to be going with our merchants want us to go.
So the more information we can have the better off we're going to.
Got it. Thank you and then in previous quarters, we've talked about.
Some of your efforts around multiple logo.
Could you just give us an update on what youre seeing in regards to that that effort and remind investors and the community about the value proposition that you can provide there.
Yes.
Sure sure so local to local it's a very complementary business from what we call Cross border. The service itself is the same.
<unk> always process payments locally for local payment methods are in local currency. The only difference is.
Merchants want to receive the funds internationally are they want to receive them locally in markets. Many of our biggest merchants to use us in both models. So in some selected geographies they'll ask us to settle both funds locally.
On the Nordic countries, they'll ask us to expedite our repatriate them and then sell it to them for US. We're agnostic we want to make sure that merchants don't graduate from us on whatever way they decide to do business, we have a solution.
Well with them.
Both businesses are important to us they both contribute to our margin.
We believe both are strategically important to our merchants, we don't want them to have a partner for local to local in their welfare Cross border does not good business for us and we want to make sure we have a holistic solution and as we kind of.
Worked with them for many years no matter what way to decide to operate.
Got it very clear thank you.
Thank you.
I am seeing no further questions in the queue I would now like to turn the conference back to Sebastian Kennedy for closing remarks.
Sure. So I want to thank everyone for participating today and we are extremely proud of the second quarter, we just posted.
Great progress we've made in diversifying our business outside of Latam with Africa, and Asia, increasing influence in our old business. We've reached 13% of revenue switch thing. That's a very important milestone we want to reiterate our expectation and our to be north of 150% and EBITDA margin to be north of 35% both metrics for the full year.
And as always we are available so feel free to ask us any questions at any point. We are we are available to you what's great here being here today Terry Thanks, very much for your time.
Okay.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
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