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(Recasts with growth projections, adds context)
By Kylie Madry and Isabel Woodford
April 4 (Reuters) -
Uruguayan payments company dLocal Ltd said on Tuesday it expects core earnings in 2023 to grow up to 44% compared to last year, after seeing its fourth-quarter net profit drop amid potential fraud allegations.
The company, which handles payments across most of Latin America as well as parts of Africa and Asia, also forecast first-quarter revenue between $135 million and $138 million, an up to 58% bump from the year-ago quarter.
Dlocal's fourth-quarter profit of $19.4 million was down 18% year-over-year as the company saw higher operating expenses, including trapped deposits in bankrupt cryptocurrency exchange FTX and $2 million in costs related to a short-seller report.
Short-seller Muddy Waters had accused dLocal of potential fraud in the quarter, which dLocal has denied.
Its board said in December that the key allegations made by the short-seller were "without merit" following an internal review, without going into detail.
The company has yet to issue a detailed written response to Muddy Waters' claims, which included the allegation that dLocal accessed client funds, had fudged reporting of its total payment volume, and was "likely a fraud."
Dlocal on Tuesday did not immediately respond to a Reuters request for comment.
For the quarter ended Dec. 31, total payment volumes soared 78% annually to a record $3.3 billion, dLocal said in a statement, while revenue rose 55% to $118.4 million, slightly under the Refinitiv estimate of $119.48 million.
Adjusted quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter rose 39% to $40 million, and hit $153.05 million for the full year.
Dlocal forecast its adjusted EBITDA to rise in 2023 to between $200 million and $220 million.
Nasdaq shares in dLocal have recouped some of the losses since the Muddy Waters report was released, though they were still down around 30% at the end of the March from Nov. 15.
Top shareholders General Atlantic, Tiger, and Fidelity all bolstered their holdings in the company in the quarter, according to SEC filings.
CEO Sebastian Kanovich said in the release the purchases showed shareholders' "confidence in and excitement about the future of dLocal." (Reporting by Kylie Madry and Isabel Woodford; Editing by Sarah Morland and Nivedita Bhattacharjee)