Issue #24

🌍 2 Tech Innovators Changing How Money & Data Move

The fintech and healthcare tech sectors are showcasing how AI-driven platforms can thrive even amid global uncertainty. Two fast-growing innovators—each dominating a different vertical—are redefining how money and data move across borders and industries.

DLocal Limited (NASDAQ: DLO) is powering global commerce across emerging markets, connecting international brands with billions of local consumers through its cross-border payments infrastructure. Its rapid TPV growth, strong profitability, and expansion into Africa highlight why analysts are bullish on its long-term outlook.

Waystar Holding Corp. (NASDAQ: WAY) is transforming U.S. healthcare payments with its AI-powered revenue cycle management platform. Following the Iodine Software acquisition, Waystar is positioned to lead the next wave of automation and efficiency in the healthcare sector, with high recurring revenue and robust profitability.

Both companies exemplify how innovation and scale can turn complex systems—payments and healthcare—into high-margin, growth-driven businesses.

DLocal Limited (NASDAQ:DLO)

DLocal is a cross-border payment platform that enables global merchants to connect with billions of consumers in emerging markets, primarily across Latin America, Africa, and Asia. The company offers a unified and simplified technological solution for accepting local payments and making local payouts, which is essential for e-commerce and digital companies expanding into these complex, high-growth regions.

Business Model and Revenue Streams 📦

DLocal's business model is built on providing a single, asset-light technology platform to global enterprise merchants. This platform handles the entire payment process for both pay-ins (accepting payments from consumers) and payouts (sending money to local partners/users).

Its core value proposition is eliminating the need for global companies to manage multiple local entities, payment processors, and regulatory compliance frameworks in over 40 emerging markets. DLocal integrates with over 900 local payment methods, including local credit cards, digital wallets, cash payments, and bank transfers, which are crucial in markets with low credit card penetration.

Revenue comes from three core segments:

1. Transaction Fees: The primary revenue source is a transaction fee charged to global merchants, typically a percentage of the transaction value (take rate). This revenue is directly proportional to the Total Payment Volume (TPV) processed.
2. Foreign Exchange (FX) Conversion: The company generates revenue from facilitating cross-border transactions, often involving currency conversion fees when repatriating funds back to the global merchant's country.
3. Value-Added Services: This includes fees for services like enhanced fraud protection, risk management, and customized payment solutions.

Impact of Current Macroeconomic Policies

DLocal's business is uniquely exposed to the macroeconomic environment of emerging markets, which creates both risk and opportunity:

• Currency Volatility: Emerging market currencies are often volatile. While this presents a risk (e.g., devaluation can negatively impact USD-reported revenues), DLocal's business can sometimes benefit from wider FX spreads in certain markets, driving higher FX-related revenue, as seen in markets like Argentina.
• Inflation and Interest Rates: High inflation and rising interest rates in local markets can put pressure on consumer spending. However, the secular trend of digital payment adoption and the growth of e-commerce in these regions provide a significant counter-force, supporting TPV growth.
• Regulatory Environment: Tightening capital controls or new payment regulations in emerging markets can pose an operational risk, requiring DLocal to maintain its strong local regulatory expertise to ensure compliance.

Recent Performance and Corporate Developments 📈

DLocal has consistently demonstrated strong growth, particularly in its high-margin cross-border transactions.

Q2 2025 Financial Highlights: 💰

• Total Payment Volume (TPV): TPV showed robust growth, increasing 53% year-over-year (YoY) to $9.2 billion, surpassing analyst expectations. This was driven heavily by cross-border flow growth (up 76% YoY).
• Total Revenue: Revenue for Q2 2025 was $256.46 million, a significant increase of 50% YoY, also beating consensus estimates.
• Gross Profit and Adjusted EBITDA: Gross profit grew 42% YoY to $99 million. The company's adjusted EBITDA surged 64% YoY to $70 million, with the Adjusted EBITDA-to-Gross Profit ratio improving to 71%. This demonstrates excellent operational efficiency and margin expansion.
• Net Income: Net income was $42.8 million for the quarter, or $0.14 per diluted share, which beat the Zacks Consensus Estimate of $0.13.

Strategic Initiatives and Mergers: 🤝

• Geographic Diversification: The company continues to successfully diversify its business. As of Q2 2025, its top three markets accounted for less than 50% of total revenue, down from previous quarters, indicating a healthy reduction in geographic concentration risk.
• Acquisitions: A key development was the acquisition of Kenya-based AZA Finance in June 2025. This move significantly expands DLocal's geographical footprint, particularly in Africa, opening up new, rapidly growing digital economies and diversifying its revenue streams further.
• Product Innovation: DLocal is expanding its services with new product launches, including SmartPix in Brazil (for instant payments) and new integrations for Buy Now, Pay Later (BNPL) solutions and stablecoin settlement, positioning itself to capture new revenue streams and address evolving merchant needs.

Profitability and Fair Value 🎯

DLocal is already a highly profitable company, which differentiates it from many high-growth technology peers. Its path to sustained and increasing profitability is driven by three main factors:

1. Operating Leverage: The company's asset-light, scalable technology platform allows it to grow TPV and revenue at a faster rate than its operating expenses, leading to margin expansion. The consistently improving Adjusted EBITDA-to-Gross Profit ratio validates this.
2. Focus on Cross-Border and High Take-Rate Flows: Prioritizing high-margin cross-border transactions, remittances, and value-added services boosts its overall take rate and profitability.
3. Disciplined Cost Management: Management has highlighted a commitment to disciplined cost management and leveraging automation and AI initiatives to maintain its operational efficiency edge.

Valuation and Analyst Estimates

Several valuation models, including Discounted Cash Flow (DCF) analysis, suggest that DLocal's current price is fair or even undervalued, given its high-growth profile and robust profitability.

• Valuation: DCF models generally suggest an Intrinsic Value above the current market price (e.g., estimates range from roughly $16.88 to $19.87 per share in recent analysis, compared to a current price in the $14.00 range). While the Price-to-Earnings (P/E) ratio can appear high compared to the sector average, this premium reflects the company's superior growth trajectory and profitability in an expanding market.
• Analyst Consensus and Ratings: The consensus rating from analysts is a "Buy". In the past 30 days, there have been positive actions, including Citigroup maintaining a "Buy" rating and HSBC upgrading its rating to "Buy". The overall sentiment is bullish, supported by strong Q2 results and raised full-year guidance.
• Price Target: The average 12-month analyst price target is approximately $15.89 to $14.79, with a range of forecasts reaching as high as $18.90. This suggests a potential upside from the current share price, validating the "Buy" sentiment.

Investor-Focused Takeaway: Is DLO Right for Your Portfolio?

DLocal offers a unique and profitable way to gain exposure to the secular growth of digital payments and e-commerce in emerging markets. Its Q2 2025 performance underscores its strong execution, significant operational leverage, and successful geographic diversification.

Key Strengths for Investors:

• Profitable Growth: The company is already highly profitable, with impressive Adjusted EBITDA margins, distinguishing it from many growth-focused tech companies.
• Emerging Market Moat: Its deep local expertise, regulatory compliance, and extensive network of local payment methods create a significant competitive moat that is difficult for rivals to replicate quickly.
• Strategic Expansion: The AZA Finance acquisition and product launches into stablecoins and BNPL show a clear strategy for future growth and risk diversification.

What to Watch in the Near Term: 📈

• FX Management: Monitor the company's ability to manage the volatility of emerging market currencies, which remains its primary non-operational risk.
• Integration of AZA Finance: Successful integration of AZA Finance and continued growth acceleration in African and Asian markets.
• Competition: Keep an eye on how new competition, particularly from large, global payment companies or local fintechs, responds to DLocal's market dominance.

Recommendation:

DLO is viewed as a strong long-term investment backed by analyst conviction and a positive outlook for the emerging market payments sector. Its combination of rapid growth and high profitability in a hard-to-access market provides a compelling investment thesis, making it an attractive addition for investors seeking international payment exposure.

Waystar Holding (NASDAQ:WAY)

Waystar is a leading provider of cloud-based, artificial intelligence (AI)-powered software for healthcare payments. The company operates at the heart of the U.S. healthcare system's revenue cycle management (RCM), offering an end-to-end platform that helps providers (hospitals, health systems, and physician practices) accelerate payments, prevent denials, and ultimately improve their financial health so they can focus on patient care.

Business Model and Revenue Streams 📦

Waystar’s model is built on providing mission-critical Software-as-a-Service (SaaS) solutions that automate and simplify every step of the healthcare revenue cycle, from the moment a patient schedules an appointment to the final payment and reconciliation. The platform is deeply embedded in its clients' workflows, processing over $1.8 trillion in annual gross claims and spanning approximately 50% of the U.S. patient population.

Revenue comes primarily from two highly recurring segments:

1. Subscription Revenue: Stable, recurring fees charged to clients, often based on the number of users or modules adopted. This segment provides high visibility and consistent revenue growth.
2. Volume-Based Revenue: Fees that scale with the volume of transactions processed (e.g., claims submitted, patient payments collected). This segment benefits directly from increased healthcare utilization and the platform's ability to drive greater transaction efficiency for clients.

The key to Waystar's growth is its high Net Revenue Retention (NRR) Rate of 115%, indicating that existing clients are consistently increasing their usage and adopting new products over time.

Impact of Current Macroeconomic Policies

The healthcare payments sector, while relatively resilient, is affected by broader macroeconomic and legislative factors:

• Inflation and Workforce Shortages (The Need for Automation): High inflation and a severe workforce shortage in the U.S. healthcare sector are major macro tailwinds for Waystar. Providers are under immense pressure to cut costs and automate non-clinical administrative tasks. Waystar’s AI-powered RCM software, which boasts up to a 300% increase in back-office automation, becomes a critical investment, making its solutions mission-critical rather than discretionary.
• Interest Rates and Capital Spending: Higher interest rates can pressure the capital expenditure budgets of hospital systems and health networks. However, because Waystar's solutions offer clear and significant Return on Investment (ROI)—recovering millions in lost revenue and reducing administrative costs—the payback period is generally fast enough to justify the investment even in a tight capital environment.
• Healthcare Legislation: Regulatory changes, such as the One Big Beautiful Bill Act (affecting Medicaid funding) and the industry-wide pledge to simplify prior authorization, create opportunities for Waystar. Its platform is uniquely positioned to leverage AI to manage these new complexities, turning regulatory change into a catalyst for client adoption.

Recent Performance and Corporate Developments 📈

Waystar has maintained strong momentum since its public debut, showcasing double-digit growth and expanding margins.

Q2 2025 Financial Highlights: 💰

• Total Revenue: Revenue reached $270.7 million, representing robust 15% year-over-year growth, and exceeded analyst expectations.
• Net Income and Margins: Waystar reported GAAP Net Income of $32.2 million (a 12% margin) and Adjusted EBITDA of $112.6 million (a strong 42% Adjusted EBITDA margin). The management successfully raised full-year guidance for both revenue and Adjusted EBITDA, citing AI-powered innovation and strong client ROI.
• Key Metrics: Subscription revenue grew 17% YoY, slightly outpacing volume-based revenue growth of 14% YoY. The NRR of 115% validates its client expansion strategy.

Strategic Initiatives and Mergers: 🤝

• Acquisition of Iodine Software: The most significant recent development was the acquisition of Iodine Software, an AI-powered clinical intelligence leader. The acquisition was announced in July 2025 and closed in October 2025.
• Strategic Rationale: Iodine's expertise in the "mid-cycle" revenue segment (between care delivery and claim submission) is highly complementary, addressing a critical area where providers lose billions to inefficiencies.
• Financial Impact: The deal is expected to expand Waystar's Total Addressable Market (TAM) by over 15%, be immediately accretive to gross margin and Adjusted EBITDA margin, and accretive to non-GAAP net income per diluted share in 2027.
• AI Product Advancements: Waystar continues to push its proprietary AltitudeAI™ platform, launching next-generation innovations focused on end-to-end denial prevention and reimbursement recovery.

Profitability and Fair Value 🎯

Waystar is already a profitable company on both a GAAP and non-GAAP basis. Its clear path to increased, sustained profitability is through:

1. AI-Driven Operating Leverage: By automating more parts of the RCM process (both for itself and its clients), Waystar can grow revenue faster than the cost of delivering its services, leading to ongoing Adjusted EBITDA margin expansion.
2. Cross-Selling and Up-Selling: Leveraging the 115% NRR by selling additional, high-margin modules (especially AI-powered tools) to its large, entrenched client base. The Iodine acquisition significantly enhances this cross-selling potential.
3. Scale and Data Advantage: The platform’s vast scale—processing over 6 billion transactions annually—fuels its AI algorithms, creating a unique data moat that continuously improves its software’s effectiveness and value to providers.

Valuation and Analyst Estimates

Waystar's valuation reflects its position as a high-growth, profitable leader in a resilient, technology-intensive healthcare niche.

• Valuation: While metrics like the P/E ratio may appear high, the stock is generally considered fairly valued to slightly undervalued by intrinsic models given its growth and margin profile. DCF models and peer comparisons often point to a Fair Value that suggests a notable upside from the current share price.
• Analyst Consensus and Ratings: The analyst consensus is overwhelmingly positive, with a "Strong Buy" or "Buy" rating. Most analysts have reiterated or upgraded their stance in the last 30 days following the strong Q2 earnings and the Iodine acquisition news.
• Price Target: The average 12-month analyst price target is in the range of $45.00 to $50.38, suggesting a significant potential upside from its current trading level (e.g., 20-30% upside). Recent price target initiations and reiterations (e.g., Mizuho reiterating a $48.00 target) highlight this positive outlook.

Investor-Focused Takeaway: Is WAY Right for Your Portfolio?

Waystar is an excellent way to invest in the secular trend of healthcare digitization and AI-driven automation in the United States. Its strong Q2 2025 results, high recurring revenue, and superior profitability margins are highly appealing.

Key Strengths for Investors:

• Mission-Critical Software: Its platform is indispensable to provider finances, making its revenue highly stable and resilient, regardless of economic cycles.
• AI Leadership: The strategic acquisition of Iodine Software cements its position as an AI leader, integrating both financial and clinical intelligence to create a powerful, differentiated RCM platform.
• Margin Expansion: The high-growth and scalable subscription/volume model provides a clear, proven path to expanding profitability.

What to Watch in the Near Term: 📈

• Iodine Integration: Monitor the successful integration and realization of the projected revenue and cost synergies from the Iodine acquisition.
• Client Retention & Upsell: The NRR must remain high, demonstrating continued success in expanding relationships with its enterprise client base.
• Payer Consolidation: Changes in the payer landscape or reimbursement policies could impact the RCM process and require Waystar to adapt its solutions.

Recommendation:

WAY is a compelling "Buy" recommendation for investors seeking exposure to a profitable, high-growth, and deeply entrenched healthcare technology provider. Its strong analyst support and strategic focus on AI and platform expansion create a significant runway for long-term shareholder value.

A Final Word on Your Investment Decision

DLocal (DLO) and Waystar (WAY) represent two of the most compelling plays on global digitization—from cross-border commerce in fast-growing markets to AI-powered disruption of the U.S. healthcare payment system. While their sectors are worlds apart, both companies share three key traits: high growth, strong profitability, and deep competitive moats.

🌍 DLocal (DLO) – Dominating Emerging Market Payments
✔ 53% YoY TPV growth with expanding cross-border revenues
✔ Highly profitable with 71% EBITDA-to-gross profit ratio
✔ Acquisitions like AZA Finance fuel geographic and product expansion
➤ Best for: Long-term investors seeking scalable, profitable exposure to digital payments in Latin America, Africa, and Asia

🏥 Waystar (WAY) – AI-Powered Healthcare Payment Disruption
✔ 115% NRR, 42% adjusted EBITDA margin, and 15% YoY revenue growth
✔ Iodine Software acquisition expands TAM and clinical intelligence capabilities
✔ Mission-critical software with high client retention and automation-driven efficiency
➤ Best for: Growth investors looking for a stable, recurring-revenue SaaS platform at the heart of U.S. healthcare infrastructure

Investor Insight:

🌐 Want to capture the rise of digital payments across the developing world? → DLO
​ 🧬 Want AI-driven growth in one of the most defensible corners of U.S. tech? → WAY

Together, these stocks offer access to high-margin, high-growth business models at the intersection of global fintech and AI healthcare transformation. Both are backed by strong analyst support and positioned for long-term compounding returns.

We’ll be back with our next report soon, bringing you fresh insights on the market and new opportunities to watch. In the meantime, we’d love to hear from you—let us know how you found this report, what niche sectors you’d like us to cover next, and don’t forget to share your top stock holdings with us. Your feedback helps us deliver reports that matter most to your investing journey.

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Happy Trading
​— Team Premium Stock Alerts